Holding

A regulation that confers unguided and arbitrary power to terminate a permanent employee without reasons or hearing is violative of Article 14 of the Constitution and void under Section 23 of the Indian Contract Act.

Summary

The Delhi Transport Corporation (DTC) terminated the services of three permanent employees under Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952, which allowed termination by one month's notice or pay in lieu thereof without assigning reasons or holding an enquiry. The employees and their union challenged the constitutional validity of the regulation. The High Court struck it down as arbitrary and violative of Article 14. On appeal, the Supreme Court considered whether such a regulation was arbitrary and violative of fundamental rights. The majority held that Regulation 9(b) conferred unguided, uncanalised and arbitrary power to terminate permanent employees without reasons or hearing, violating Article 14 and principles of natural justice, and was void under Section 23 of the Indian Contract Act as opposed to public policy. The doctrine of reading down was held inapplicable because the language was clear and unambiguous. The Chief Justice dissented, suggesting the power could be read down with conditions. The appeal was dismissed, and other similar matters were referred to a Division Bench.

Issues considered

Whether Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952 is arbitrary, illegal, discriminatory and violative of audi alteram partem and thus constitutionally invalid.
Whether the regulation can be interpreted and read down to be constitutional.
Whether similar provisions in other regulations (e.g., Shastri Award, District Board Rules, Indian Airlines Regulations, Air India Regulations) are valid.
Whether termination of services without enquiry violates Articles 14, 16, 19, 21 and principles of natural justice.

Legislation cited

Air India Employees' Service Regulationss. 48
Constitution of Indias. 12, s. 14, s. 16, s. 19, s. 21, s. 311(2)
Delhi Road Transport Act, 1950s. 53
Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952s. 9(b)
District Board Rules, 1926s. 1(1) Part V
Indian Airlines Employees' Service Regulationss. 13
Indian Contract Act, 1872s. 23
Shastri Awards. 522

Subjects

Service LawConstitutional LawArticle 14Natural JusticeTermination of ServicePublic EmploymentReading DownContract ActArbitrary PowerAudi Alteram Partem

Judgment

A DELHI TRANSPORT CORPORATION
v.
D.T.C. MAZDOORCONGRESS

SEPTEMBER 4, 1990

B [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'
c Regulations-Regulation JJ/Air India Employees' Regulations-Re-
gulation 48-Validity of-Termination of service of permanent emp-
loyee 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
D Constitution of India, principles of natural justice arrd Section 23 of
Contract Act, 1872-Statutory corporations-Power to terminate ser-
vices of employees without holding enquiry-Validity of.

Contract Act, 1872: Section 23-Contract providing for termina-
tion of service without notice and holding of enquiry-Whether
E 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 of Fundamental Rights
and principles of natural justice-Regulations/Rules-Validity of.
F
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
G invalid-Whether could be validated by reading down-Where provi-
sion 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 \...
H policy provides an aid-Role and purpose of constitutional interpreta-
tion by apex i:ourt.
142
D.T.C. v. D.T.C. MAZDOOR CONGRESS 143

Administrative Law-Discretionary power-Exercise of-Limi-
A
tations-Absence of arbitrary power-Fi;st essential of Rule 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 Corpora- B
tion 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
c
thereof. The Division Bench of the High Court struck down the Regula-
tion, holding that the Regulation gave absolute, unbridled and arbi-
trary powers to the management to terminate the .services of any per-
manent or temporary employee, and •uch power was violative of Article
14 of the Constituiion. Hence, the Corporation filed ihe appeal before b
this Court, by special leave.

The validity of similar provmons in Para 522 of the Shastri
Award, rule l(i) of the 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 con- E
tract 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 F
termination, properly read, would not be arbitrary or violative of Arti-
cle 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 G
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 H
144 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R.

rationale of this rule of interpretation, or th~ doctrine of reading down
A
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
B · 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 trans-
gress 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 Regu-
c lation 9(b) read with Regulations 9(a) and 15, that even for the exercise of this
power, reasons could be recorded although they need not he communi-
cated 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
D 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
E or holding of an enquiry is neither a universal principle of justice nor
inOexiable dogma and the principles of natural justice were not incap-
able 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
F 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 safe-
guard 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
G 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
H 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
A
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 B
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. c
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. D
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 record-
ing reasons for such termination, violated the fundamental rights
guaranteed under Articles 14, 19(1)(g) and 21 and principles of natural E
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 F
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 indefi-
nitely or till the age of retirement could be exercised only in cases of G
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 require-
ment of audi alteram partem which was a part of the gliaraiitee of
146 SUPREME COURT REPORTS I 1990] Supp. I S.C.R.
Article 14 was sought to be excluded, and there could be no guidance
A
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
B 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
c 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,
D therefore, in order to conform to the constitutional guarantees con-
tained 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) delibera-
tely conferred wide power of termination of service without giving
E reasonable opportunity to an employee even if he was regular or per-
manent employee, in addition to regulation 15 which provided for dis-
missal 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
F 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
G insecurity which is against the philosophy and scheme of the Constitu-
tion, that unless the provision of the Constitution itself excluded the
principles of natural justice, they continued to be applicable as an integ-
ral 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- -...-
H 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,
A
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 recog- B
nised 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 c
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,
D
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 con-
cerned before making the order, and took in even private employment; E
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 F
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 G
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- H
148 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

ous or reduced to a "glorious uncertainty", that no principle of
A
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 provi-
si(Jns existed, firstly to remove from service after holding an enquiry on
B 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 opera-
c tion 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
D governed by rule of law, discretion when conferred upon executive
authorities must be confined within clearly defined limits.

' Appeal No. lllS of 1976, the appellant-employee of the
In Civil
Zila Parishad contended that his services were terminated on account of
the vindictiveness of some of the employees of the respondent, and
E 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.

F On the questions (i) whether Regulation 9(b) of the Delhi Road
Transport Authority (Conditions of Appointment and Service) Regula-
tions, 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
G not confer unbriddled and uncanalised power on the authority to ter-
minate 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
H 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
A
K. Ramaswamy, JJ.) this Court, ·

HELD: Per Ray, J.:

I.I Regulation 9(b) of the Delhi Road Transport Authority (Con-
ditions of Appointment and Service) Regulations, 1952 which confers B
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 unre-
stricted violating principles of natural justice as well as Article 14 of the
Constitution. There is no guideline in the Regulations or in the Delhi c
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 D
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 Constitu- E
tion. Furthermore, the procedure prescribed by their Rules or Regula-
tions 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 F
quasi-judicial orders but to administrative orders affecting prejudi-
cially 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 of Law, which permeates the
Constitution of India, demands that it has to be obse.-ved both sub- G
stantially 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 H
150 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R.

'audi a/teram partem' rule and as such the order of termination of
A
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 of which the purported order is made. [265F]

B 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 per-
manent employee without recording any reasons and without conform-
ing 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
C of Article 14 of the Constitution. [265E, 265B-C, 266G]

Moti Ram Deka Etc. v. General Manager, NEF Railways, Mali-
gaon, 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
D 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.
E 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
F 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 of Hindustan Steel Ltd. andAnr. v.
G 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 Under-
takingv. Balbir Saran Goel, [1970] 3 SCR 757, referred to.

H 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 A
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 B
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 equa-
lity 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 c
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 unambi-
guous meaning that it can be interpreted by reading dowu and presum- D
ing 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 E
the services of an employee without conforming to the principles of
natural justice and equality as envisaged in Article 14 of the Constitu-
tion 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. F
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 Pro-
perty (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 of Bihar & Anr., [1968] 1SCR231, referred to.
H.N. Seervai: Constitutional Law of India, Third Edition, p. 119,
referred.to. H
152 SUPREME COURT. REPORTS [ 1990] Supp. 1 S.C.R.

Per Sharma, J.
A
J ~ J The rights of the l?arties in the present cases cannot be gover-
ned by the general principle of master and servant, and the manage-
ment cannot have unrestricted and unqualified power of terminating
the services of the employees. In the interest of efficiency of the public
B bodies, however, they should have the authority to terminate the emp-
loyment of undesirable, inefficient, corrupt, indolent and disobedient
employees, but it must be exercised fairly, objectively and indepen-
dently; and the occasion for the exercise must be delimited with preci-
sion 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.
c And this is possible only when the law lays down detailed guidelines in
unambiguous and precise terms so as to avoid the danger of mis-
interpretation 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]
D
J.2 Regulation 9(h) of the Delhi Road Transport Authority (Con-
dition of Appointment and Service) Regulation, 1952 cannot, therefore,
be upheld for lack of adequate and appropriate guidelines. [272G]

Per Sa want, J.
E
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
F 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, circums-
pection 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
G 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 pre-
H sumption, 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
A
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. B
Both discipline and devotion are necessary for efficiency. To ensure
both, the service conditions of those who work for them must b<
encouraging, certain and secured, and not vague and whimiscal. With
capricious service conditions, both discipline and devotion are endan-
~
gered, and efficiency i~ impaired. [276G-H, 277 A]

1.4 The right to life includes right to livelihood. The right to c
livelihood, therefore, cannot hang on to the fancies of individuals in
authority. The employment is not a bounty from them nor can its survi-
val be at their mercy. Income is the foundation of many fundamental
rights and when work is the sole source of income, the right to work
becomes as much fundamental. Fundamental rights can ill-afford to be D
consigned to the limb of undefined premises and uncertain applications.
That will be a mockery of them. [277B]

1.5 Both the society and the individual employed, therefore, have
an anxious interest in service conditions being well-defined and expli-
cit to the extent possible. The arbitrary rules which are also somet~es E
described as Henry VIII Rules, can have no place in any service
conditions. [277C]

Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanshi
& Anr., [1975] 3 SCR 619; Maneka Gandhi v. Union of India, [!978] 2
SCC 621; The Manager, Government Branch Press & Anr. v. D.R. F
Belliappa, [1979] 1 SCC 477; The Managing Director, Uttar Pradesh
Warehousing Corporation & Anr. v. Vinay Narayan Vajpayee, [1980] 2
SCR 773; A.L. Kalra v. The Project & Equipment Corporation of India
Ltd., [1984] 3 SCR 646; Workmen of Hindustan Steel Ltd. & Anr. v.
Hindustan Steel Ltd. & Ors., [1985] 2 SCR 428; West Bengal State
Electricity Board & Ors. v. Desh Bandhu Ghosh & Ors., [1985] 2 SCR G
1014; Olga Tellis & Ors. v. Bombay Municipal Corporation & Ors.
etc., [1985] Supp. 2 SCR 51; Union of India & Anr. v. Tulsiram Patel &
Ors., [1985] Supp. 2 SCR 131; Central Inland Water Transport Corpp-

-
'
,
ration Ltd. & Anr. v. Brojo Nath Ganguly & Anr. etc., [1986] 3 SCR
156; O.P. Bhandari v. Indian Tourism Development Corporation Ltd.
& Ors., [1986] 4 SCC 337; N.C. Dalwadi v. State of Gujarat, [1987] 3 H
154 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A SCC till; M.K. Agarwal v. Gurgaon Gramin Bank & Ors., [1987]
Supp. SCC 643 and Daily Rated Casual Labour employed under p & T
Department through Bhartiya Dak Tar Mazdoor Manch etc. v. Union
of India & Ors., [1988] I SCC 122, referred to.

2.1 The doctrine of reading down or of recasting the statute can
B be applied in limited situations. It is essentially 'used, firstly, for saving
a statute from being struck down on account of its unconstitutionality.
It is a~ extension of the principle that when two interpretations are
possible-one rendering it constitutional and the other making it con-
stitutional the former should be preferred. The unconstitutionality may
spring from either the incompetence of the legislature to enact the
c statute or from its violation of any of the provisions of the Constitution.
The second situation which summons its aid is where the provisions of
the statute are vague and ambiguous and it is possible to gather the
intention. of the legislature from the object of the statute, the context in.
which the provision occurs and the purpose for which it is made. How-
ever, when the provision is cast in a definite and unambiguous language
D and its intention is clear, it is not permissible either to mend or bend it
even if such recasting is in accord with good reason and conscience. In
such circumstances, it is not possible for the Court to remake the
statute. Its only duty is to strike it down and leave it to the legislature if
it so desires, to amend it. If the remaking of the statute by the courts
is to lead to its distortion that course is to be scrupulo11sly avoided. The
E doctrine can never be called into play where the statute requires exten-
sive additions and deletions. Not only it is no part of the court's duty to under-
take such exercise, but it is beyond its jurisdiction to do so. [288F-H, 289A-B]

Re Hindu Women's Rights to Property Act, 1937, and the Hindu
Women's Rights to Property (Amendment) Act, 1938 etc., [1941] FCR
F 12; Nalinakhya Bysack v. Shyam Sunder Halder & Ors., [1953] SCR
533; R. M.D. Chamarbaugwalla v. The Union of India, [1957] SCR
930; Keditr Nath Singh v. State of Bihar, [1962] Supp. 2 SCR 769; R.L
Arora v. State of Urtar Pradesh & Ors., [1964] 6 SCR 784; Jagdish
Pandey v. The Chancellor, University of Bihar & Anr., [1968] I SCR
231; Shri Umed v. Raj Singh & Ors., [1975] I SCR 918; Mohd. Yunus
G Salim's case, AIR 1974 SC 1218; Sunil Batra etc. v. Delhi Administra-
tion & Ors., [1978] 4 SCC 494; Excel Wear etc. v. Union of India &
Ors., [1979] 1SCR1009; Minerva Mills Ltd. & Ors. v. Union of India
&. Ors., [1981] 1SCR206; Union of India & Anr. etc. v. Tulsiram Patel
etc., [1985] 3 SCC 398 and Elliott Ashton Welsh, !Iv. United States, 398
US 333; 26 L.ed. 2nd 308, referred to.
H

1'
,...
~ D.T.C. v. D.T.C. MAZDOOR CONGRESS 155

2.2 Therefore, the doctrine of reading down cannot be availed of
A
for saving the regulation in the instant case. In the first instance, the
regulation is a part of the service regulations of the employees made by
" the Delhi Road Transport Authority in exercise of the powers conferred
by sub-section (1) read with clause (c) of sub-section (2) of Section 53 of
the Delhi Road Transport Act, 1950, whose object is to provide for the
establishment and the regulation of Road Transport Authority for the B
; promotion of a co-ordinated system of road transport in the State of
Delhi. There is nothing either in the object of the service regulations or
in the object of the Act which has a bearing on Regulation 9(b). If
anything the object of the Act would require framing of such service
regulations as wonld ensure dedicated and diligent employees to run the
undertaking. The dedication of the employees would pre-suppose secu-
rity of employment and not a constant hanging of the Democle's sword c
over their head, and hence would in any case not bear the existence of
such regulation. Secondly, the language of regulation is so crystal clear
that no two interpretations are possible to be placed on it and hence it is
not permissible to read in it any meaning other than what is clearly
~i;- sought to be conveyed by it. Thirdly, the context of the regulation D
makes it abundantly clear that it is meani to be a naked hire and fire
rule and the authority ha• been vested with unguided and arbitrary
power to dispense with the services of any category of the employees.
Sub-clause (a) of the Regulation mentions elaborately the circumstances
in which the services of an employee can be terminated without any
notice or pay in lieu of such notice. Sub-clause (b) follows closely on its E
heel and states in clear language that when the termination is made due
to reduction of establishment or in circumstances other than those
mentioned in sub-clause (a), one month's notice or pay in lieu thereof is
all that is necessary to be given for terminating an employee's services.
The intention of the rule-making authority, therefore, is more than
clear. It was to give an absolute free hand without any limitations F
whatsoever to terminate the services of any employee. Both the
language of the regulatfon as well as the context in which it is cast leave
·no scope for reading into it any further provision. [289C-H, 290A]

2.3 Moreover, reading in the rule circumstances under which
alone the rule can be used, and reading it down to read in it words or G
expressions or provisions in order to save the legislation would not only
distort the intention of the rule-making authority but woald also
require .extensive amendment of a very vague nature to it. The reading
_""-I_,,,,_ in the regulation of a provision that the concerned employees should be
-· given a hearing with regard to his mis-conduct will require that he
shonld first he intimated of the misconduct of which he is guilty. But H
•
156 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R. ,_
that kind of a situation is taken care of by sub-clause (a) of the said
A regulation. There is. therefore, no need of a separate provision for the
same. If, on the other hand, the services of an employee are to be
terminated on grounds other than those mentioned in sub-clause (a),
•
then those grounds being unknown to the employee, cannot be met by
him even if he is given a hearing. The Court cannot read in the rule all
circumstnaces where it is not possible or necesary to hold an enquiry. ~
B
Such situations are capable of being formulated easily and conveniently (
at least in gcl'1eral ter1n~ as is done by the Constitution-1nakers in the '
second proviso to Article 3JJ(2). The reading of such circumstances in
the existing regulation would require its extensive recasting which is
impermissible for the Court to do. There is no authority which supports
such wide reading down of any provision of the statute or rule/regula-
c lion. Therefore the doctrine of reading down is 'ingularly inapplicable
to the p~esent case. [281B, 2908, 29IA-F]
I
3. Clause (b) of Regulation 9 contains the much hated and abused
Tule of hire and fire reminiscent of the days of laissez faire and unre-
D strained freedom of contract. [274E]

Per Ramaswamy, J.
'
I >
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
E 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 manage-
ment. 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]
F
Daily Rated Casual Labour v. Union of India, [!988] J SCR 598
= [1988] Isec 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
G 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
H 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] A

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. B
1.3 The right to life, a bask human nght, assured by Article 21 of
the Constitution comprehends some thing more than mere.animal exist-
ence; 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 of Articles 14, 16(1), 19(l)(g) and 21. [296A, 297B] c
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 b
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 discre-
tion to dismiss a pennanent employee without any guidelines or pro- E
cedure 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. F

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 G
_ 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 H
158 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

invoked to test the validity of executive as well as legislative actions
A 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
B 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 ter-
minated in accordance with just, fair and reasonable procedure pre-
scribed under the provisions of the Constitution or the Rules made
under proviso to Article 309 of the Constitution or the statutory provi-
c sion 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]
D
R.C Cooper v. Union of India, [1970] 3 SCR 530; Minerva Mills
Ltd. v. 'union of India, [!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
E 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 engraf-
ted in Art. 311 (2) as an exception in the given circumstances enu-
merated in these clans"-' of the proviso to Art. 311(2) of the Constitu-
tion. Article 14 read with Articles 16(1) and 311 are to be harmoniously
F 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
G "·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 of India & 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.,
H [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
A
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 Constitu-
tion. 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 B
concept of reasonableness and non-arbitrariness pervades the entire
constitutional spectrum and is a golden thread which runs through the
whole fabric of the 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
c
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, D
the greater the chances of abuse. Absolute discretion is destructive of
freedom than of man's inventions. Absolute discretion marks the begin-
ning 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 arbi-
trary, unreasonable or unfair actions and would not be consistent with E
reason and justice. [3208-D]

J.9 The right to public employment which includes right to con-
tinued 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 F
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 liveli-
hood or continued employment must be just, fair and reasonable proce-
dure and conformable,to the mandate of Articles 14 and 21. In other
words, an employee in a public.employment also must not be arbitra-
rily, unjustly or unreasonably deprived of his/her livelihood which is G
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 of India & Ors., [1970] l SCR
457; Union of India v. Col. J.N. Sinha and Anr., [1971] 1 SCR 791; H
160 SUPREME COURT REPORTS [1990] Supp. I S.C.R. ----
Fertilizer Corporation Kamgar Union (Regd.), Sindri & Ors. v. Union
A
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 Elect-
ricity Board & Ors. v. D.B. Ghosh & Ors., [1985] 2 SCR 1014; Work-
men of Hindustan Steel Ltd. & Anr. v. Hindustan Steel Ltd. & Ors.,
B [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<arwal v. Gurgaon Gramin Bank & Ors., [1987]
Suppl. SCC 643; All Saints High School v. Government of A.P., [1980]
2 SCR 924 & 938 e to f; Frank Anthoney Public School v. Union of
c India, [1987] I SCR 238 & 269 b toe; Christian Medical College Hospi-
tal Employees' Union & Anr. v. Christian Medical College Ve/lore
Association & Ors., [1988] I SCR 546 & 562; Kameshwar Prasad v.
State of Bihar, [1962] Suppl. 3 SCR 369 and O.K. Ghosh v. EZX
Joseph, [1963] Supp. I SCR 789, referred to.
D
Unit~d States v, Samuel D. singleton, [1981] 109 US. 3, referred
I•
to.
i
i
1.10 '{) ndoubtedly, efficiency of the administration and the disci-
pline among the employees is very vital to the successful functioning of
E an institution or maximum production of goods or proper maintenance
of the services. Discipline in that regard amongst the employees is its
essential facet and has to be maintained. The society is vitally interested
in the due discharge of the duties by the government employees or
employees· of corporate bodies or statutory authorities or instrumenta-
lities under Art. 12 of the Constitution. The government or corporate
F employees are, after-all, paid from the public exchequer to which
everyone contributes either by way of direct or indirect taxes. The
employees are charged with public duty and they should perform their
public duties with deep sense of responsibility. The collective responsi-
bility of all the oflicers from top most to the lowest maximises the
efficient public administration. They must, therefore, be held to have
G individual as well as collective responsibility in discharge of their dnties
faithfully, honestly with full dedication and utmost devotion to duty.
Equally the employees must also have a feeling that they have security
of tenure. They should also have an involvement on their part in the
organisation or institution, corporation, etc. They iteed assurance of
service and protection. The public interest and the public good
H demands th~t those who discharge their duties honestly, efficiently and
D.T.C. v. D.T.C. MAZDOOR CONGRESS 161

with a sense of devotion and dedication to duty should receive adequate
A·
protection and security of tenure. Therefore, before depriving an emp-
loyee of the means of livelihood to himself and his dependents, i.e. job,
the procedure prescribed for such deprivation must be just, fair and reason-
able under Arts. 21 and 14 and when infringes Art. 19(l)(g) must be subject
to imposing reaso/llllhle n!S!rictions under Art. 19(5). [320G-H, 321A-O, 3220]
B
1.11 Conferment of power on a high-rank officer is not always an
assurance, in particular, when the moral standards are generally
degenerated, that the power would be exercised objectively, f!!llSOnably,
conscientiously, fairly and justly without inbuilt protection to an emp-
loyee. Even officers who do their duty honestly and conscientiously are
subject to great pressures and pulls. Therefore, the competing claims of
the "public interest" as against "individual interest" of the employees
c
are to be harmoniously blended so as to serve the societal need consis-
tent with the constitutional scheme. (3220-E]

J.12 Regulation 9(b) of the Delhi Road Transport (Conditions of
Appointment and Service) Regulations, 1952, is arbitrary, unjust, D'
unfair and unreas()i1able offending Articles 14, 16(1), 19(1)(g) and 21 of
the Constitution. It is also opposite to the public policy and ·thereby is
void under Section 23 of the Indian Contract Act. [330G]

J.13 Under ordinary law of master and servant, whether the con-
tract of service is for a fixed period or not, if it contains a provision for E
termination of service by notice, in terms thereof, it can be so deter-
mined and if the contract finds no provision to give notice and the
contract of service is not for a fixed period, law implies giving of a
reasonable notice. Where no notice or a reasonable notice was issued,
before terminating the contract, the termination of the contract of
service is wrongful and the aggrieved employee is entitled at law to sue F
for damages. It is,not disputed that the Delhi Road Transport Corpora-
tion is a statutory Corporation under the Delhi Road Transport Act and
the Regulations are statutory and its employees are entitled to the
fundamental rights enshrined in Part III of the Constitution. The
Corporation or an instrumentality or other authority under Article 12
is not free, like an ordinary master (a private employer) to terminate G
the servi.ces of its employees at its whim or caprices or vagary. It is
bound by the Act and the Regulation and paramount law of the land,
the Constitution. [292G-H; 293A-B]

1.14 Any law, much less the provisions of ~:ontract Act, which
are inconsistent with the fundamental rights guaranteed in Part III of H
162 SUPREME COURT REPORTS [1990) Supp. I S.C.R.

the Constitution, are void hy operation of Article 13 of the Constitution.
A The law of contract, like the legal system itself, involves a balance
between competing sets of values. Freedom of contract emphasises the
need for stability, certainty and predictability. But, important as values
are, they are not absolute, and there comes a point when they face a
serious challenge. 'fhis Court, as a court of constitutional conscience
B enjoined and is jealously to project and uphold new values in establish-
ing the egalitarian social order. As a court of constitutional functionary
exercising equity jurisdiction, this Court would relieve the weaker
parties from unconstitutional contractual obligations, unjust, unfair,
oppressive· and unconscienabJe rules or conditions when the citizen is
really unable to meet on equal terms with the State. It is to find whether
the·citizen, when entered into contracts of service, was in distress need
c or compelling circumstances to enter into contract on dotted lines or
whether the citizen was in a pos~tion of either to "'take it or leave it"
and if it finds to be so, this Court would not shirk to avoid the contract
by appropriate declaration. [302G, 3038, 304H, 30SA-B]

D Central Inland Water Transport Company Limited v. Brojonath
Ganguly, [1986) 3 SCC 156=AIR 1986 SC 1571, affirmed.

Ramdas Vithaldas Durbar v. S. Amarchand & Co., 43 Indian Appeals.
164 and V. Ra!!,hunadha Rao v. State of Andhra Pradesh, [1988] 2 A.L.T.
461, referred to.
E
Anson's Law of Contract, p. 6 and 7 and Professor Guido
Calabresi of Yale University Law School "Retractivity, Paramount
power and Contractual Changes", 1961-62 71 Yale Law Journal,
P. 1191, referred to.

F 2.1 The golden rule of statutory construction is that the words
and phrases or sentences should be interpreted according to the intent
of the legislature that passed the Act. All the provisions should be read
together. If the words of the statutes are in themselves precise and
unambiguous, the words, or phrases or sentences themselves alone do,
then no more can be necessary than to expound those words or phrases
G or sentences in their natural and ordinary sense. But if any doubt arises
from the terms employed by the legislature, it is always safe means of
collecting the intention, to call in aid the ground and cause of making
the statute, and have recourse to the preamble, which is a key to open
the minds of the makers of the statute and the mischiefs which the Act
intends to redress. In determining the meaning of statute the first ques-
H lion to ask always is what is the natural or ordinary meaning of that
D.T.C. v. D.T.C. MAZDOOR CONGRESS 163

word or phrase in its context. It is only when that meaning leads to some
A
result which cannot reasonably be supposed to have been the intent of
the legislature,
'
then it is proper to look for some other possible meaning
and the court cannot go further. (3230-G]

2.2 The Doctrine of Reading Down is, therefore, an internal aid
io construe the Word or phrase in a statute to give reasonable meaning, B
but not to detract, disort or emasculate the language so as to give the
supposed purpose to avoid unconstitutionality. Thus, the object of read·
ing down is to keep the operation of the statute within the purpose of the
Act and constitutionally valid. [324E, 3258]

2.3 It cannot be accepted that the Courts, in the process of in-
terpretation of the Statute, would not make law but leave it to the c.
legislature for necessary amendments. In an appropriate case, Judges
would articulate the inarticulate major premise and would give life and
force to a Statute by reading harmoniously all the provisions ironing out
the creezes. The object is to alongate the purpose of the Act. ,(3238]
D
2.4 The Courts, though, have no power to amend the law by
process of interpretation, but do have power to mend it so as to be in
conformity .with the intendment of the legislature. Doctrine of reading
down is one of the principles of interpretation of statute in that process.
But when the offending language used hy the legislature is clear, precise
and unambiguous, violating the relevant provisions in the constitution, E
resort cannot be had to the doctrine of reading down to blow life into
·the void law to save it from unconstitutionality or to confer jurisdiction
on the legislature. Similarly it cannot be· taken aid of to emasculate the
precise, explicit, clear and unambiguous language to confer arbitrary,
nnbridled and uncanalised power on an employer which is a negation to
jnst, fair and reasonable procedure envisaged under Articles 14 and 21 F
of the Constituiion and to direct the authorities to record ~easons,
unknown or unintended procedure. ,(3268, 327A-B]

-Elliott Ashton Walsh, II v. United States, 398 U.S. 333; Nalina-
khya Bysack v. Shyam Sunder Haldar & Ors., (1953] SCR 533 at
544-45; United States v. Wunderlick, 342 U.S. 93; S.C. Jaisinghani v. G
Union of India, (1967] 2 SCR 703; In re Hindu Women's Right to
Property Act, (1941] FCR, 12; K.N. Singh v. State of Bihar, (1962]
Suppl. 2 SCR 769; R.L. Arora v. State of U.P., (1964] 6 SCR 784;
Jagdish Pandev v. Chancellor of the Bihar, [1969] l SCR 231; Amritsar
Municipality v. State of Punjab, [1969] 3 SCR 447; Sunil Batra v. Delhi
. Admn .. [1978] 4 SCC 494; N. C Dalwadi_v. State of Gujarat, [1987] 3 H

...
164 SUPREME COURT REPORTS ( 1990] Supp. I S.C.R.

SCC 611; Charania/ Sahu v. Union of India, [1989] Suppl. Scale I at p.
A
61; Delhi Transport Undertaking v. Balbir Saran Goel, [1970] 3 SCR
747; Air India Corporation v. Rebel/ow, (1972] 3 SCR 606 and Munici-
pal Corporation of Greater Bombay v. P.S. Malyankar, [1978] 3 SCR
1000, referred to.

B Federal Steam Navigation Co. v. Department of Trade and
Industry, [1974] 2 All E.R. 97 at p. 100 and Saints High School,
Hyderabad v. Govt. of A.P., (1980] 2 SCR 924, referred to.

Craies Statute Law, 7th Ed. Ch. V, P. 64.

2.5 The language of Regulation 9(b) is not capable of two ioter-
c pretations. This power is in addition to the normal power in Regulation
15 to conduct an enquiry into misconduct after giving reasonable
opprotunity. Thereby, the legislative intention is manifest that it
intended to confer such draconian power couched in language of width
which hangs like Damocles sword on the neck of the employee, keeping
D every employee on tenter-hook under constant pressure of uncertainty,
precarious tenure at all times right from the date of appointment till
date of superannuation. It equally enables the employer to pick and
choose an employee at whim or vagary to terminate the service
arbitrarily and capriciously. Regulation 9(b), thereby deliberately con-
ferred wide power of termination of services of the employee without
E following the principles of audi alteram partem or even modicum of
procedure of representation before terminating the services of per-
manent employee. (327E-G]

2.6 No doubt, the power to take appropriate arid expeditious
action to meet the exigencies of weeding out inefficient, corrupt, indo-
F lent officers or employees from service should be provided and pre-
served to the competent authority but any action taken without any
modicum of reasonable procedure and prior opportunity always
generates an unquenchable feeling that unfair treatment was meted out
to the aggrieved employee. To prevent lili~carriage of justice or hi
arrest a nursing grievance that arbitrar)' whimsiral or tapririoµs action
G was taken behind the back of an employee without opportunity, the law
must provide a fair, just and reasonable procedure as is exigible io a
given circumstance as adumbrated io proviso to Art. 31}(2) of the
Constitution. If an individual action is taken as per the procedure on its
own facts its legality may be tested. But it would be no justification to ~
roofer power with wide discretion on any authority· without aily proce-
H dure which wouid not meet the test of justness, fairness anil reasonable-

...
D.T.C. v. D.T.C. MAZDOOR CONGRESS 165

ness envisaged under Arts. 14 and 21 of the Constitution. Therefore,
conferment of power with wide discretion without any guidelines, with-
A
out any just, fair or reasonable procedure is constitutionally anathema.
to Arts. 14, 16(1), 19(1)(g) and 21 of the Constitution. Doctrine of read•
ing down cannot be extended to such a situation. [328A-C, 3298-C]

2. 7 In view of the march oflaw, made by Article 14 it is too late in B
the day to contend that the competent authority would be vested with
wide discretionary power without any proper guidelines or the proce-
dure. When it is found that the legislative intention is unmistakably
clear, unambiguous and specific, the preamble, the other rules and the
circumstances could not be taken aid of in reading down the provisions Of
the rules or the regulations of the constitutional scheme. [330F -G]
c
3.1 The phrases "public policy", opposed to public policy, or
"contrary to public policy" are incapable of precise definition. It is
valued to -meet the PllbJic good or the public interest. What is public good
or in the public interest or what W!mld be injurious or harmful to the
public good or the public interest vary from time to time with the D
change of the circumstances. Therefore, in the absence of specific head
of public policy which covers a case, then the court must in consonance
. with public conscience and in keeping with public good and public
interest invent new public policy and declare such practiee or rules that
are derogatory to the constitution to be opposed to public policy. The
rules which stem from the public policy must of necessity be laid to E
further the progress of the society, in particular when social change is to
bring about an egalitarian social order through rule of law. In deciding
a case which may not be covered by authority, courts have before them
the beacon light of the trinity of the Constitution viz., the preamble, Part
III and Part IV and the play of legal light and shade must lead on the
path of justice social, economic and political. Lacking precedent, the F f
court can always be guided by that light and the guidance thus shed by
the trinity of our Constitution. [308C-D, 309G-H, 310A]

3.2 Since Constitutions are the superior law of the land, and
because one of their outstanding features is. flexibility and capacity to
meet changing conditions, constitutional policy provides a valuable aid G
in determining the legitimate boundaries of statutory meaning. Thus
public policy having its inception in Constitutions may accomplish
either a restricted or extended interpretation of the literal expression Of
a statute. A statute is always presumed to be constitutional and where
necessary, a constitutional meaning will be inferred to preserve validity.
Likewise, where a statute tends to extend or preserve a constitutional H
166 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A principle, reference to analogous constitutional provisions may be of
great value in shaping the statute to accord with the statutory aim or
objective. Therefore, when the provisions of an Act or Regulations or
Rules are assailed as arbitrary, unjust, unreasonable, unconstitutional,
public law element makes it incumbent to consider the validity thereof
on the anvil of inter play of Arts. 14, 16(1), 19(1)(g) and 21 and of the
B
inevitable effect of the provision challenged on the rights of a citizen and
to find whether they are constitutionally valid. [310C-O, 3UE]

4. The absence of arbitrary power is the first essential of the rule
of law npon which our whole constitutional system is based. In a system
governed by rule of· law, discretion, when conferred upon executive
c authorities, most be confined within defined limits. The rule of law
from this point of view means that decisions should be made by the
application of known principles and rules and, in general, such deci-
sions should he predictable and the citizen should know where he is. If a
decision is taken without any principle or without any rule it is unpre-
dictable and such a decision is the antithesis of a decision taken in
D
accordance with the rule of law. [3280-E]

5. No doubt, it is open to the authorities to terminate the services
of a temporary employee without holding an enquiry. But in view of the
march of law made, viz., that it is not the form of the action but the
substance of the order which is to be looked into, it is open to the Court to lift
E
the veil and pierce the action challenged to find whether the said action
is the foundation to impose punishment or is only a motive. The play of
fair play is to secure justice procedural as well as substantive. The
substance of the order, the effect thereof is to be looked into. [330C-O]

Shamsher Singh v .. State of Punjab, [1975] 4 SCR 814, referred to.
F
It is for concerned authorities to make appropriate rules or regu-
lations and to take appropriate action even without resorting to elabo-
rate enquiry needed consistent with the constitutional scheme. [331A]

Workmen of Hindustan Steel Ltd. v. Hindustan Steel Ltd. & Ors.,
G [1985] 2 SCR 428, referred to.

Ram Chanderv. Union of India, [1986] 2 SCR 980, referred to.
'
6. The ratio in Brojonath's case was correctly laid down and
requires no recons\deration. [3310]
H
D.T.C. v. D.T.C. MAZDOOR CONGRESS 167

Central Inland Water Transport Company Limited v. Brojonath
A
Ganguly, [1986] 3 SCC 156=AIR 1986 SC 1517, affirmed.

Per Mukharji, CJ., (Contra)

I. The constitutionality of the conferment of power to terminate
services of a permanent employee without holding an enquiry is sus- B
tained by reading that the power must be exercised on reasons relevant
for the efficient running of the services or performing of the job by the
societies or the bodies. It should be done objectively, the reasons should
be recorded, and the basis that it is not feasible or possible reasonably
to hold any enqiry without disclosing the evidence which in the cir-
cumstances of the case would be hampering the running of the ins-
titution. The reasons though recorded, need not be communicated, c
it is only for the purpose of running of the institution. There should
be factors which hamper running of the institution without the ter-
. mination of the employment of the employee concerned at the parti-
cular time, either because he is a surplus or inefficient, disobedient and
dangerous. [235C-El D

2.1 The philosophy of the Indian Constitution, as it has evolved,
from precedent to precedent, has broadened the horizons of the right of
the employees. and they have been assured security of! tenures and
ensured protection against arbitrariness and discrimination in dis-
charge or termination of his employment. This is the basic concept of E
the evolution from the different angles of law of master and servant or
in the evolution of employer and employee relationship. It. is true that
the law has travelled in different channels, government servants or
servants or employees having status have to be differentiated from those
whose relationships are guided by contractual obligations. However,
the basic and fundamental question to be judged is, in what manner and F
to what extent, the employees of either of semi-Government or statutory
corporations or public undertakings who enjoy the rights, privileges,
limitations and inhibitions of institutions who come within the ambit of
Article 12 of the Constitution could be affected in their security of
tenure by the employers consistent with the rights evolved over the
years and rights emanating from the philosophy of the Constitution as G
at present understood and accepted. [229D-G]

2.2 Efficiency of the administration of these undertakings is very
- vital and relevant consideration. Production must continne, services
most be maintained and run. Efficacy of the servic~s can be manned
only by the disdplined employees or workers. Discipline, decency and H
168 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

order will have to be maintained. Employees should have sense of
A
participation and involvement and necessarily sense of security in semi-
permanent or quasi-permanent or permanent employment. There must
be scope for encouragement for good work. In what manner and in what
measure, this should be planned and ensured within the framework of
the Constitution and, power mingled with obligations, and duties
B enjoined with rights, are matters of constitutional adjustment at any
particular evolved stage of the philosophy of our Constitution. [230A-C]

2.3 Arbitrary, whimsical or discriminatory action can flow or
follow in some cases by the preponderance of these powers to terminate.
The fact that the power is entrusted with a high ranking authority or
C body is not always a safe or sound insurance against misuse. At least, it
does not always ensure against erosion of credibility in the exercise of
the power in particular contingency. Yet discipline has to be main-
tained, efficiency of the institution has to be ensured. It has to be
recognised that quick actions are very often necessary in running of an
institution or public service or public utility and public concern. It is
D not always possible to have enquiry because disclosure is difficult; evi-
dence is hesitant and difficult, often impossible. In those circumstances,
the approach to the location of power, possession and exercise of which
is essential for efficient running of the industries or services, has to be a
matter both of balancing and adjustment, on which one can wager the
salavation of rights and liberties of the employees concerned and the
E future of the industries or the services involved. [330D-F]

2.4 The power to terminate the employment of permanent emp-
loyment must be there. Efficiency and expediency and the necessity of
running an industry or service make it imperative to have these powers.
f Power must, therefore, be with authorities to take decision quickly,
objectively and independently. Power must be assumed with certain
conditions of duty. The preamble, the policy, purpose of the enacting
provision delimit the occasions or the contingencies for the need for the
exercise of the power and these should limit the occasions of exercise of
such powers. The manner in which such exercise of power should be
G made should ensure fairness, avoid arbitrariness and ma/a fide and
create credibility in the decisions arrived at or by exercise of the power.
All these are essential to ensure that power is fairly exercised and there

H
is fair play in action. Reasons, good and sound, must control the exer-
cise of power. [230G-H, 231A)

Thus, for the running of the industry or the service, efficiently,
-
D.T.C. '· D.T.C. MAZDOOR CONGRESS 169

quickly and in a better manner or to avoid dead-locks or inefficiency or
friction, the vestin~_of the power in circumstances must be such that it
A
will evoke credibility and confidence. Notice of hearing and opportunity
in the form of an. enquiry may or may not be given, yet arbitrariness
and discrimination. and acting whimsically must he avoided. These
.powers must, therefore, be so read that the powers can be exercised on
reasons, which should be recorded, though need not alw3ys be com- B
municated, and must be by authorities who are high ranking or senior
enough and competent and are expected to act fairly, objectively and
independently. The occasion for the use of power must be clearly
circumscribed in the above limits. These must also circumscribe that
the need for exercise of those powers without holding a detailed or pro-
longed enq11iry' is there, [231E, F.G)
c
Work.men of Hindustan Steel Ltd. & Anr. v. Hindustan Steel Ltd.
~ Ors., [1985) 2 SCR 428; West Bengal State Electricity Board and
Others v. Desh Bandhu Ghosh and Others, [1985) 3 SCC 116; Moti
Ram Deka v. North East Frontier Railway, [19851 5 SCR 683; S.S.
Muley v. J.R.D. Tata, [1979) 2 SLR 438; Manohar P. Kharkhar v. D
Raghuraj, [1981) 2 LLJ 459; Centrai"Inland Water Transport Corpora-
tion Limited and Anr. v. Brojo Nath Gangu/y and Anr., (1985] 3 SCC
156; Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, (1975] 3
SCR 619; Union of India & Anr. v. Tulsi Ram Patel, [1985] Suppl. 2
SCR 131 at p. 166; Tata Oil Mills Co. Ltd. v. Workmen & Anr., [1964]
2 SCR 125 at 130; L. Michael & Anr. v. M/s Johnston Pumps India E
Ltd., [1975) 3 SCR 489 at 498; Delhi Transport Corporation Undertak-
ing v. Balbir Saran Goel, [1970] 3 SCR 757 at 764; Air India Corpora-
tion, Bombay v. V.A. Rebel/ow & Anr., [1972] 3 SCR 606; Municipal
Corporation of Greater Bombay v. P.S. Malvenkar & Ors., [1978] 3
SC::R 1000 at page 1006; Roshan Lal Tandon v. Union of India, [1968] 1
SCR 185 •at 195 D·E; Champak Lal Chiman Lal Shah v. The Union of F
India, [1964] 5 SCR 190 at 204; Ram Gopal Chaturvedi v. State of
M.P., [1970) 1 SCR 472 at 475; Gheru Lal Parekh v. Mahadeodas
Maiva & Others, [1959] Supp. 2 SCR 406 at 440; O.P. Bhandari v.
1. T. D: C. & Ors., [1986] 4 SCC 337; The Hindu Women's Rights to
Property Act, [1941] FCR 12; Fertilizer Corporation Kamgar Union
( Regd.) Sindri and Others v. Union of India and Others, [1981] 2 SCR G
at 60·61; Ajay Hasia etc. v. Khalid Mujib Sehravardi & Ors. etc.,
[1981) 2 SCR 79at100·102; A. V. Nachane & Anr. v. Union of India &
Anr., [1982] 2 SCR 246; India Tobacco Co. Ltd. v. The Commercial
Tax Officer, Bhavanipore & Ors., [1975]2 SCR 619 at 657; A. L. Kalra
v. The Project and Equipment Corporation of India Ltd., [1984] 3 SCR
646 at 664; Bandhua Mukti Morcha v. Union of India.& Ors., [1984] 2 H
.
170 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

SCR 79 at 101; Hindustan Antibiotics Ltd. v. The Workmen & Ors.,
A [1967] 1 SCR 652 at 669; The Collector of Customs, Madras v. Nathe/la
Sampathu Chetty, [1962] 3 SCR 786 at 825; Commissioner of Sales Tax,
Madhya Pradesh v. Radhakrishan & Ors., (supra); Gurdev Singh
Sidhu v. State of Punjab & Anr., [1964] 7 SCR 587 at 592-593; U.P.
State Electricity Board v. Hari Shankar Jain, [1979] 1 SCR 355/362-3;
B A.R. Antulay v. R.S. Nayak and Anr., [1988] 2 SCC 602; S.G. Jaising-
hani v. Union of India and Ors., [1967] 2 SCR 703 at p. 718-19 and
Kesavananda Bharati v, State of Kera/a, [1973] Supp. I SCR 1, referred
to.

A. Schroeder Music Publishing Co. Ltd. v. Macaulay, (Connerly
Instone), [1974] 1W.L.R.1308, referred to.
c
Chitty on Contract, 46th Edition Vol. II, p. 808 or 25th Edition
Vol. II p. 712 paragraph and Halsbury's Law of England, 4th Edition
Vol. No. 16 paras 607 and 608, referred to.

D 3.1 Courts have been tempted to read down in the path of judicial
law making on the plea that legislature. could not have intended to give
powers to the authorities or employers which would be violative of
fundamental rights of the persons involved in the exercise of those
powers and, therefore, should be attributed those powers on conditions
which will only make these legal or valid. Our law making bodies are
E not law unto themselves and cannot create or make all laws. They can
only confer powers or make laws for the conferment of powers on
authorities which are legal and valid. Such_powers conferred must con-
form to the constitutional inhibitions. [232C-D]

3.2 Legislation, both statutory and constitutional, is enacted from
F experience of evils. But its general language should not n.ecessarily be
confined to the form that the evil had taken place. Time works changes,
brings into existence new conditions and purposes and new awareness
of limitations. Therefore, a principle to be valid must be capable of
wider application than the mischief which gave it birth. This is particu-
larly true of the constitutional constructions. Constitutions are not
G ephemeral enactments designed to meet passing occasions, but designed
to approach immortality as nearly as human institutions can approach
it. In the application of a Constitutional limitation or inhibition, the
interpretation cannot be only of 'what has been' but of 'what may be'.
Therefore, in the interpretation of the provisions of an Act, where two

H
1
constructions are possible, the one which leads towards constitutiona-
lily of the legislation would be preferred to that which has the effect of -
D.T.C. v. D.T.C. MAZDOOR CONGRESS 171

destroying it. If the Courts do not read the conferment of power in the
A
aforesaid manner, the power is liable to be struck. down as bad. l233B-D]

3.3 The Court must proceed on the premise that the law making
authority intended to make a valid law to confer power validly or which
will be valid. The freedom, therefore, to search the spirit of the enact-
ment or what is entended to obtain or to find the intention of the B
Parliament gives the Court the power to supplant and supplement the
expressions used to say what was left unsaid. This is an important

- branch of judicial power, the concession of which if taken to tht
extreme is dangerous, but denial of that power would be ruinous and
this is not contrary to the expressed intention of the.legislature.or the
implied purpose of the legislation. [234G-H; 23SA]
c
3.( It has been said that if the legislature has manifested a clear
intention to exerc~se an unlimited power, it is impermissible to read
down the amplitude of that power so as to make it limited. This cannot
be agreed to. Our legislatures are limited by the constitutional inhibi-
tions and it is made, that the Court should read their Acts and .enact- · D
ments with the attribute that they know their limits and could not han
intended to violate the Constitution. It is true that the Court should be
loath to read down where there are clear. unambiguous and positive
terms in a legislation and should procec.: with a straight forward
method of striking down such legislations. But where !re statute is silent
or not expressive or inarticulate, the Court must read down in the E
silence of the statute and in the inarticulation of its provisions, the
Constitutional inhibitions and transmute the major inarticulate premise
into a reality and read down the statute accordingly. [236H, 237A-B]

3.~ The plain thrust of legislative enactment has to be found out
in the inarticulate expressions and in the silence of the legislation. In F
doing so, to say what the legislature did not specifically say, is not
distortion to avert any constitutional collision .. [237E)

. In the language of the relevant provisions of the instant cases,
there is no intention of the legislature to flout the constitutional
limitations. [237E] G

Elliot Ashto Welsh II v. United States, 398 US 333, 26 Ed.
2d. 308, referred to.

3.6 It is not that the reading down is used for a purpose which is
just the opposite which the legislature had intended. Legislature had not H
172 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

intended arbitrary or uncontrolled or whimsical power. Indeed it con-
sidered. This is not the proper way to read that power in the Regulation
9(b). Para 522 of the Shastri Award, read properly, must be circums-
cribed with the conditions indicated above as a necessary corollary or
consequence of that power. It is also not reading to the legislature
conditions which were not there in the second proviso to Article 311(2)
B of the Constitution. [237H, 238A-B]

Union of India & Anr. v. Tulsiram Patel, [1985] Supp. 2 SCR
131, relied on.

No doubt, absolute powers cannot be regulated without essential
legislative policy, but in the instant cases properly read, absolute power
c was not there. Power that was only constitutionally valid, that power
can be presumed to have been given and if that presumption is made,
conditions indicated above inevitably attach. But these conditions are
necessary corollary flowing from the conferment of the power of termi-
nation in a .constitutional manner for the smooth, proper and efficient
D running of the industry. [238C, El

3. 7 In the circumstancs power must be there, the power must be
read down in the man~er and to the extent indicated above, of terminat-
ing the services of permanent employees without holding any enquiry in
the stated contingencies and this would he either by virtue of the silence
E of the provision indicating the contingencies of termination or by virtue
of constitutional inhibitions. That reading would not violate the theory
that judges should not make laws. [238F-G]

Shri Ram Krishna Dalmia v. Justice Tandolkar, [1959] SCR 279
at 299; Jyoti Prasad v. The Administrator for the Union Territory of
F Delhi, [1962] 2 SCR 125 at 139; Union of India v. Col. J.N. Sinha &
Anr., [1970] 2 SCC 450 at 461; N.C. Dalwadi v. State of Gujarat, [1987]
3 SCC 611 paragraphs 9 and IO at page 619; Commissioner of Sales
Tax, M.P., Indore & Ors. v. Radhakrishan & Ors., [1979] 2 SCC 249
at 257; Olga Tellis & Ors. etc. v. Bombay Municipal Corporation &
Ors., [1985] Suppl. 2 SCR SI at 89; R.M.D. Chamarbaugwalla v.
G Union of India, [1957] SCR 930 at p. 935 and 938; Kedar Nath Singh v.
State of Bihar, [1962] Supp. 2 SCR 769; R.L. Arora v. State of Uttar
Pradesh, [1964] 6 SCR 784; Jagdish Pandev v. The Chancellor,
University of Bihar & Anr., [1968] 1 SCR 231, at pages 236-237; Sunil
Batra v. Delhi Administration & Ors., [1978] 4 SCC 494; Tinsukhia
Electric Supply Co. Ltd. v. State of Assam & Ors., [1989] 3 SCC 709;
H Charan Lal Sahu & Ors. v. Union of India, [1989] Suppl. SCALE I, at
D.T.C. v. D.T.C. MAZDOOR CONGRESS 173

pages 53 and54, paras 101 as well asp. 61para114; Shah & Co. v. State
of Maharashtra, [1967] 3 SCR 466 at 477-78; M. Pentiah and On. v. A
Veera-Mallappa al'!d Ors., [1961] 2 SCR 295; Ba,ngalore Water Supply
and Sewerage Board etc. v. A. Rajappa & Ors., [1978] 3 SCR 207;
Minerva Mills Ltd. & Ors., v. Union of India & Ors., [1981] l SCR
206, at p .. 239 and 259; Elliott Ashton Welsh, II v. United States, 26
Lawyers' Edition 2nd, 308 at 327; Malinakhva Bysack v. Shyam Sunder B
Haldar & Ors., [1953] SCR 533, at p. 544-545 and Municipal Commit-
tee, Amritsar & Anr. v. State of Punjab & ors., [1969] 3 SCR 447,
referred to.

United States of America v. E.dward A. Rumely, 91 Lawyers Edi-
tion 770 at 775; Reg. v. Sadlers Co., IO H.L.C. 404, 460 and 463;
Framamus v. Film Artists Association, 196 2 QB 527 at 542 and Seaford c
Court Estates, [1949] 2 KB 481, referred to .

.H.M. Seervaid 'Constitutional Law of India', 3rd Edn. Vol. I
pages 119-120 and Lord Denning: "The discipline of Law", at p. 12,
referred to. D

3.8 Termination simpliciter under Regulation 9(b) of the Regula-
tion 1952, IJelhi Road Transport Authority (Conditions of Appointment
and Services) or similar powers can be-exercised only in circumstances
other than those in Regulation 9(a). The exercise of such powers can
only be for purposes germane and relevant to the statute, viz., the
.employee is incompetent or unsuitable so as to make his continuance in
the employment detrimental to the interest of the institution, or where
the continuance of the employee is a grave security risk making his
continuance detrimental to the interest of the Corporation and w·here
because of the conduct of the employee, or there is lack of confidence in
·the employee which makes it necessary in the interest of the Corpora- F
tion to immediately terminate the services of the employee etc., etc.
Therefore, each case of conferment .of power inv0lved should he ju~ed
on the afor.esaid basis. [236E-GJ

3,9 Having regard to the finality of the position of law and having
regard to the theory that parties have adjusted their rights on the G
understanding of the law as it was, justice of the situation would be met
if pending litigations are examined and disposed of in the light of
aforesaid principles. Where issues of damages or consequences of
termination by virtue of exercise of the power are still pending adjudi-
cation in any for0m and hav~ ben been finally adjudicated, these should
be .re-ex3mined by the appropriate authorities before whom these issues H
174 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

are pending, but previous terminations, where no lis is pending, will not
be reopened. To that extent, the law will be prospective. [239D-F]

4. This Court, under Article 141 of the Constitution, is enjoined
to declare law. The expression 'declared' is wider than the words
'found or made'. To declare is to announce opinion. Indeed, the latter
B involves the process, while the former expresses result. Interpretation,
ascertainment and evolution are parts· of the process, while that
interpreted, ascertained or evolved is declared as a law. The law
declared by this Court is the law of the land. To deny this power to this
Court on the basis of some outmoded theory that the Court only finds
law but does not make it, is to make ineffective the powerful instrument
of justice placed in the hands of the highest judiciary of this country.
c Therefore. there should be a more active and creative role for the courts
in declaring what the law is. [240E·G]

1. C. Go/aknath & Ors. v. State of Punjab & Anr., [1967] 2 SCR
762@8! I; 813/84, referred to.
D
CIVIL APPELLA1E JURISDICTION: Civil Appeal No. 2876
of 1986.

From the Judgment and Order dated 14.5. 1986 of the Delhi High
Court in Civil Writ No. 1422 of 1985.
E 1
Soli J. Sorabji, Attorney General, Ashok Desai, Solicitor
General, Vinod Bobade, M.C. Bhandare, M.K. Ramamurthv, R.K.
Garg, Mrs. Shyamala Pappu, P.P. Rao, Mrs. J. Wad, Mrs. Aruna
Mathur, Ms. A. Subhashini, P. Parmeshwaran, D.K. Garg, A.K. Sil,
G. Joshi, S.K. Gupta, B.R. Sabharwal, Mrs. Seita Vidyalingam, S.K.
F Bisaria (NP), _Salman Kurshid, Irshad Ahmad, V.D. Phadke, A.
Sharan, Lalit Bhasin, Ms. Nina Gupta, Vineet Kumar, R.C. Bhatia,
P.C. Kapur (NP), B.S. Charya (NP), Vijay K. Verma,_C.M. Nayar,
H.S. Munjral and A. V.S.L. Somayajulu (NP) for the appearing parties.

Satnam Singh appellant in person in C.A. No. 1115 of 1976.
G

The Judgments of the Court were delivered by

SABYASACHI MUKHARJI, CJ. These civil appeals, special
leave petitions and civil miscellaneous petitions deal with the question
H of constitutional validity of the right of the employer to terminate the
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI. CJ.I 175

services of permanent employees without holding any inquiry in
A
certain circumstances by reasonable notice or pay in lieu of notice. The
facts involved in these matters are diverse but the centralquestion
involved in all these is one, i.e. whether the clauses permitting the
employers or the authorities concerned to terminate the employment
cif the employees by giving reasonable notice or pay in liea of notice
but without holding any inquiry, are constitutionally valid and, if not, B
what would be the consequences of termination by virtue of such
clauses or powers, and further whether such powers and clauses could
be so read with such conditions which would make such powers con·
stitutionally and legally valid? Jn order to appreciate the question the
factual matrix of these cases so far as these are relevant for the
• determination of the aforesaid questions, will have to be borne in mind
in the light of the actual legal provisions involved in the respective c
cases.

It will, therefore, be proper and appropriate to deal with the
relevant facts in civil appeal No. 2876 of 1986 first. The appellant
herein-the Delhi Transport Corporation, is a statu(ory body formed D
and established under Section 3 of the Delhi Road Transport Act, 1950
read with Delhi Road Transport (Amendment) Act, 1971 (hereinafte_r
called 'the Act'). The appellant carries out the objects of vital public
utility, according to the appellant, i.e. transport of passengers in the
Union Territory of Delhi and other areas. Respondent No. 2, Sri
Ishwar Singh was appointed as conductor therein on probation for a E
period of 1 year in 1970. The probation period was extended thereafter
for a further period of one year and thereafter he was regularised in
service of the appellant. Similarly, respondent No. 3-Sri Ram Phal
was appointed as Assistant Traffic Incharge and after the probation
period he was regularised in service. Respondent No. 4--Sri Vir Bhan
was appointed as driver and after completing the probation period he F
was also regularised in service.His stated that respondents Nos. 2 to 4
became, according to the appellant, inefficient in their work and
started inciting other staff members· not to perform their duties. They
were served with termination notices on 4th June, 1985 under Regula-
tion 9(b) of the Delhi Road Transport Authority (Conditions of
Appointment & Service) Regulations, 1952. On - I Ith June, 1985 G
respondents Nos. 2 to 4 and their Union being respondent No. 1-
DTC Mazdoor Congress, filed writ petition No. 1422/85 in Delhi High
Court, challenging the constitutional validity of Regulation 9(b) of the
Delhi Ro~d Transport Act. On llth•May, 1986 the division bench of
the·High Court of Delhi allowed the said writ petition and struck down
Re_gulation 9(b) of the said Regulations, and directed the appellant to H
176 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

pay back respondents' wages and benefits within 3 months from the
A
daie of the said judgment. This is an appeal, therefrom, by special
leave. The question, therefore, is, was the High Court justified i~ the
view it took? It may be mentioned that regulations 9(a) & (b) were
framed in exercise of the powers conferred u/s 53 of the said Act,
which enables the formulation of Regulations. Regulation 9 of the said
B regulations, which is material for the present controversy, reads as
follows:

"9. Termination of service: (a) Except as otherwise
specified in the appointment orders, the services of an
employee of the authority may be terminated without any
notice or pay in lieu of notice:
c
(i) During the period of probation and without assigning
any reason thereof.

(ii) Fot misconduct,
D
(iii) On the completion of specific period of appointment.

(iv) In the case of employees engaged on contract for a
specific period, on the expiration of such period in accor-
dance with the terms of appointment.
E
(b) Where the termination is made due to reduction of
establishment or in circumstances other than those men-
tioned at (a) above, one month notice or pay in lieu thereof
will be given to all categories of employees.

F (c) Where a regular/temporary employee wishes to resign
from his post under the authority he shall give three/one
month's notice in writing or pay in lieu the.reof to the
Authority provided that in special cases, the General Man-
ager may relax, at his discretion, the conditions regarding
the period of notice of resignation or pay in lieu thereof."
G
The said Regulat"ion, as set out hereinbefore, deals with termina-
tion of services. Four contingencies are contemplated vide clause (a)
of Regulation 9, whereupon the services of employees may be ter-
minated without any notice or pay in lieu thereof except as otherwise
provided in the appointment order. Apart from these four oontin-
H gencies where termination is made due to reduction of establishment
D.T.C v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 177

or in circumstances other than those mentioned in clause (a) above,
A
one month's notice of pay in lieu thereof is required to be given to all
categories of employees. Therefore, except in the said four cases, if
thete is reduction . of establishment or there is any terminatiori
uncovered by these four contingencies referred to in clause (a) the
sanie shall be by giving one month's notice or pay in lieu thereof to all
categories of employees. Clause (c) postulates when a regular or B
temporary employee wishes to resign from his post under the autho-
rity then in such a situation one month's notice in writing or pay in lieu
thereof io the authority may be provided.

The High Court in the judgment urtder appeal noted that since
the filing of this petition the notices issued by D.T.C. to its various
employees have beert withdrawn and all these persons have been rein- c
stated, therefore, the court was not concerned with the validity of
clause {a) of Regulation 9 but respondents Nos. 2 to 4 against whom
action had been taken by the appellant by issuing notices of termina-
tion undet Regulation 9{b) had not been reinstated and the court
considered the validity of Regulation 9{b ). It was held by the court D
that the said provision gave absolute, unbridled and arbitrary powers
to the Management to terminate the services of any permanent or
temporary employee. It was contended that such power was violative
of Article 14 of the Constitution.

In support of this contention, reliance had been placed, on whkh E
the High Court also relied upon, on the decision of this Court in
Workmen of Hindustan Steel Ltd. & Anr. v. Hindustan Steel Ltd. &
Ors., [1985] 2 SCR 428. In that case, Standing Order 31 of M/s.
Hindustan Steei Ltd., a public sector undertaking, had prescribed for a
detailed procedure for dealing with cases of misconduct; and for
imposing major penalty, the employer had to draw up a chargesheet F
and give an opportunity to the delinquent workman to make his rep-
resentation within 7 days. If the allegations were coritt<iverted, an
enquiry had to be held by an .officer to be nominated by the manage-
ment and in such an eriquiry reasonable opportunity of explaining and
defending the alleged misconduct had to be given fo the workman.
Suspension of the delinquent workman pending enquiry was also· G
permitted. At the ertd of the enquiry, if the charges were proved, and
it was provisionally decided to impose any major penalty, the delin'
quent workman had to be afforded a further reasonable opportunity to
represent why the penalty should not be imposed on him .. Standing
Order 32 provided for a special procedure in case a workman was
convicted for a criminal offence in a court of law or where the Genetai H
178 SUPREME COURT REPORTS [ i990] Supp. 1 S.C.R.

Manager was satisfied for reasons to be recorded in writing that it was
A
inexpedient or against the interests of security to continue to employ
the workmen' viz. the workman could be removed or dismissed from
service without following the procedure laid down in Standing Order
No. 31. There the appellant was an Assistant in the respondent's
undertaking, who was removed from service on the ground that it was
B no longer expedient to employ him. The management dispensed with
the departmental enquiry, after looking into the secret report of one
of their officers that the appellant therein had misbehaved with the
wife of an employee and that a complaint in respect thereof had been
lodged with the police. In the reference to the Industrial Tribunal, the
Tribunal held that as the employer dispensed with the disciplinary
enquiry in exercise of the power conferred by Standing Order 32, it
c could not be said that the dismissal was unjustified, and that if there
were allegations of misconduct, the employer was quite competent to
pass an order of removal from service without holding any enquiry in
view of the provisions contained in Standing Order 32, and rejected
the reference. There was an appeal to this Court. This Court held that
D the reasons for dispensing with the enquiry do not spell out what was
the nature of the misconduct alleged to have been committed by the
appellant and what prompted the General Manager to dispense with
the enquiry. As there was no justification for dispensing with the
enquiry, imposition of penalty of dismissal without the disciplinary
enquiry as contemplated by Standing Order 31 was illegal and invalid.
E It was directed that the respondent should recall and cancel the order
dated 24th August, 1970 removing the appellant from service, and·
reinstate him and on the same day the appellant was directed to tender
resignation of his post which should be accepted by the respondent.
The respondent should pay as and by way of back wages and future
wages, a sum of Rs.1.5 lakhs to the appellant within 2 months which
F should be spread over from year to year commencing from the date of
removal from service. It was reiterated that where an order casts a
stigma or affected livelihood, before making the order, principles of
natural justice of a reasonable opportunity to present one's case. and
controvert the adverse evidence must have full play. Even under the
Constitution which permits dispensing withJhe inquiry under Article
G 311(2) a ·Safeguard is introduced -that the concerned authority must
specify reasons for its decision why it was not reasonably practicable to
hold the inquiry. Standing Order 32 nowhere obligates the General
Manager to record reasons for dispensing with· the inquiry as pres-
cribed by Standing Order 31. On the contrary, it was held that the
language of Standing Order 32 en joins a duty upon the General
H Managi:r to record reasons for his satisfaction why ·it was inexpedient
i
'.
I.
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJl. CJ.] 179

or against the interest of the security of the State to continue to employ
the workman. Reasons for dispensing with the enquiry and reasons for A
not continuing to employ the workman, stand wholly apart from each
other. This Court finally observed thafit was time for the public sector
undertaking to recast Standing Order, and to bring it in tune with the
philosophy of the Constitution failing which the vires of the said Stand-
ing Order would have to be examined in an appropriate proceeding. B

Reliance was also placed before this Hon'ble Court on the deci-
sion of this Court in the case of West Bengal State Electricity Board and
Others v. Desh Bandhu Ghosh and Others, [1985) 3 SCC 116, where
this Court was concerned with regulations 33 and 34 of the West
Bengal State Electricity Board. The said regulations 33(1) and 34 were
as follows: c
"33(1) Unless otherwise specified in tj:Je appointment
order in any particular case, the services of a permanent
employee of the Board may be terminated without notice-
D
(i) on his attaining the age of retirement or by reason of a
declaration by the competent medical authority that he is
unfit for further service; or

(ii) as a result of disciplinary action;
E
(iii) if he remains absent from duty, on leave or otherwise,
for a continuous period exceeding 2 years.

34. In case .of a permanent employee, his services may be
terminated by serving three months' notice or on payment
of salary for the corresponding period in lieu thereof." F

The High Court had come to the conclusion in that case that
Regulation 34 was arbitrary in nature and suffered from the vice of
enabling discrimination. The High Court, therefore, struck down the
first paragraph of Regulation 34 and as a consequence quashed the
order terminating the services of the first respondent therein. It was G
contended before this court on appeal that the Regulation 34 did not
offend Article 14 of the Constitution, that Sections 18-A and 19 of the
Electricity Supply Act laid down sufficient guidelines for the exercise
of the power under Regulation 34 and in any case the power to ter-
minate the services of any permanent employee was vested in high
rankfog officials who might be expected to exercise the same in a H
180 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

reasonable way. This Court was unable to accept that argument. This ·
A
Court was of the view that the regulation was totally arbitrary and
conferred on the Board a power which was capable of vicious discrimi-
nation. This Court was of the view that it was naked 'hire and fire'
rule. the time for banishing which, according to this Court in the said
decision, altogether from employer-employee relationship was fast
B approaching. It is only parallel, this Court was of the view, to the
Henry VIII clause so familiar to administrative lawyers.

Reference was made to the decision of this Court in Moti Ram
Deka v. North East Frontier Railway, [1985] 5 SCR 683, where Rules
148(3) and' 149(3) of the Indian Railway Establishment Code had been
challenged on the ground that these Rules were contrary to Article
c 311(2) of the Constitution. The challenge was upheld though no
opinion was expressed on the question whether the rule offended Arti-
cle 14 of the Constitution or not since then Article 14 has been
interpreted in several decisions of this Court and conferment and exer-
cise of arbitrary .power on and by the State or its instrumentalities have
D been frowned upon and struck down by this Court as offending Article
14 cit the Constitution.
>
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
E 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 Regula-
tion. 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
F 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
G 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 Presi-
dent 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
H 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 Presi- A
dent 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 B
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 Corpo-
ration and that Company for dissolution of the latter and taking over
of its business and liabilities by the· former. The Scheme, inter alia,c
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 D
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 E
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 stereo-
type forms under which the Corporation could without any previous
notice terminate their services, if. the Corporation was satisfied that F
the employee was unfit medically or if he was guilty of any insub-
ordination, 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 G
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 H
182 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A 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 pro-
posed 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 state-
B
ments 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)
c 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
D 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
E 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
F 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
G 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 Pub-
lishing 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 pro- A
misee 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 consi-
deration."
B
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 c
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 D
parties or not or where the weaker party is in a position in which he
could obtain goods or services or means of livelih<iod only upon the
terms imposed by the stronger party or go without them ot where a
man had no choice, or rather no meaningful choice, but to give his
assent to a contract or to sign on the dotted line in prescribed or
standard form or to accept a set of rules as part of the contract, how- E
ever, unfair, unreasonable and unconscionable clause in that contract
or form or rules might be. This Court, however, reiterated that this
principle would not apply where the bargaining power of the contract-
ing parties is equal or almost equal. This principle would not apply
where both parties are businessmen and the contract is a commercial
transaction. The contracts of this type to which the principle for- F
mulated above applied were not contracts which were tainted with
illegality but were contracts which contained terms which were so
unfair and unreasonable that they shock the conscience of the Court.
In the vast majority of cases such contracts are entered into by the ·
weaker party under pressure of circumstances, generally economic,
which results in inequality of bargaining power. Such contracts will not G
fall within the four corners of the definition· of "undue influence"
given in Section 16( 1) of the Contract Act, even though at times they
· are between parties one of whom holds a real or apparent authority
over the other. Contracts in prescribed or standard forms or which
embody a set of rules as part of the contract are entered into by the
party with superior bargaining power with large number of persons or H
184 SUPREME COURT REPORTS [1990] Supp. I S.C.R.
.·
a group of persons, if they are unconscionable, unfair and unreason-
A
able, are injurious to the public interest, should be adjudged void
according to Justice Madon, under Section 23 of the Contract Act on
the ground of being opposed to public policy. Public policy, it was
reiterated, is not the policy of any particular Government. It connotes ,..
some matter which concerns the public good and the public interest.
B The principles governing public policy must be and are capable on
proper occasion, of expansion or modification. If there is no head of
public policy which covers a case, then the Court must in consonance
with publi~ conscience and in keeping with public goods and public
interest declare such practice to be opposed to public policy. In any
case which is not covered by authority, courts should be guided by the
Preamble to the Constitution and the principles underlying the
c Fundamental Rights and the Directive Principles. Rule 9(i) can aptly
be called 'the Henry VIII Clause" this Court opined therein. It confers
an absolute, arbitrary and unguided power upon the Corporati.on to
exercise that power. This Court was concerned with the "Central
Inland Water Transport Corporation Ltd. Service Discipline and
D Appeal Rules" framed by the Corporation. The relevant provisions of
the said Rule 9 relating to permanent employees therein were as
follows:

"9. Termination of employment for Acts other than
misdemeanour-
E
(i) The employment of a permanent employee shall be
subject to termination on three months' notice on either
side. The notice )shall be in writing on either side. The
c ·company may pay the equivalent of three months basic pay
· and dearness allowances, if any, in lieu of notice or may
F deduct a like amount when the employee has failed to give
due notice.

(ii) The services of a permanent employee can be termina-
ted on the grounds of "services no longer required in the
interest of the Company" without assigning any reason. A
G permanent employee whose services are terminated under
this clause shall be paid 15 days' basic pay and dearness
·.. allowance for each completed year of continuous service in
·the Company as compensation. In addition he will be
· entitled to encashment of leave to his credit."

H This Court found that Rule 9(i) can be called 'the Henry VIII
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.I 185

Clause'. It confers an absolute, arbitrary and unguided power upon A
the Corporation. It does not even say who on behalf of the Corpora- .
tion was to exercise that power. While the Rules provided for four
different modes in which the services of a permanent employee could
be terminated earlier than his attaining the age of superannuation,
namely, Rules 9(i), 9(ii), 36(iv)(b) read with 38 and 37, Rule 9(i) is the
I only rule which does not state in what circumstances the power confer- B
red by that rule is to be exercised. Thus even where the Corporation
. could proceed. under a regular disciplinary inquiry, it is free to resort
instead to Rule 9(i) in order to avoid the trouble of an inquiry. No
opportunity of a hearing was at all intended to be afforded to the
permanent employee whose service was being terminated in the exer-
cise of that power. It violated audi alteram partem rule of natural
---·-
justice also which was -implicit in Article 14 of the Constitution. It is
c
not covered by any of the situations which would justify the total
exclusion of the au di alteram partem rule. The view that the Board of
Directors would not exercise this power arbitrarily or capriciously as it
consisted of responsible and highly placed persons ignored, it was
held, the fact that however highly placed a person might be, he must D
necessarily possess human frailties and "power tends to corrupt, and
absolute power corrupts absolutely." It was, however, held that Rule
9(i) was also discriminatory for the Corporation was given power to
discriminate between employee and employee. It was stated that it
could back up one employee and apply to him Rule 9(i). It could pick
up another employee and apply to him Rule 9(ii). It was further E
reiterated that the Corporation was a large organisation. The said
Rules formed part of the contract of employment between the Corpo-
--~
ration and its. employees who were not workmen. These employees
i had no powerful Union to support them. They had no voice in the
framing of the said Rules. They had no choice ·but to accept the said
Rules as part of their contract of employment. There was gross dispa- f
rity between the Corporation and its employees, whether they be
workmen or officers. The Corporation could afford to dispense with
the services of an officer and will find many others to take his place but
an officer cannot afford to lose his job because if he does so, there are
not many jobs waiting for him. It was, therefore, held that clause 9(i)
of the said regulation was against right and reasons and it was wholly G
unconscionable. It had been entered into between p_arties between
whom there was gross inequality of bargaining power. Rule 9(i) was a
term of the contract between the Corporation and all its officers, it was
noted. It affected a large number of persons and it squarely fell within
the principle stated earlier. The Government and its agencies and
instrumentalities constitute the largest employer in the country. A 1-i
186 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

clause such as Rule 9(i) in a contract of employment, it was noted,
A
affecting large sections of the public was harmful and injurious to the
public interest for it tended to create a sense of insecurity in the minds
of those to whom it applied and consequently against public good.
Such a clause, therefore, was opposed to public policy and as such it is
void under Section 23 of the Contract Act, it was held. It was further
B held that it was not possible to accept the contention that this was a
contract entered into by the Corporation like any other contract
entered into by it in the course of its trading activities and the Court,
therefore, ought not to interfere with it. The employees could not be
equated with goods which could be bought and sold, nor could a con-
tract of employment be equated with a mercantile transaction between
two businessmen. much less when the contract of employment was
c between a powerful employer and a weak employee. Although it was
reiterated that the aforesaid rule 9(i) was supported by mutuality
inasmuch as it conferred an equal right upon both the parties but
considering the unequal position of the Corporation and its emplo-
yees, there was no real mutuality, this Court opined. It was reiterated
D that the Corporation being covered by Article 12, its actions must also
be in accordance with the Directive Principles prescribed by Part IV of
the Constitution. Reference may be made to paragraph 39 of the
aforesaid decision where this Court noted that in the working of the
Constitution, it was found that some of the provisions of the Constitu- J
tion were i:iot adequate for the needs of the country or for ushering in a
E Welfare State and the constituent body empowered in that behal.f
amended the Constitution several times. By the very first amendment
made in the Constitution, namely, by the Constitution (First Amend-
ment) Act, 1951 clause (6) of Article 19 was amended with retrospec'
tive effect. Under this amemdment, sub-clause (g) of Article 19(1)
which guarantees to all citizens the right to carry on occupation, trade
F or business, was not to prevent the State from making any law relating
to the carrying on by the State, or by a Corporation owned or control-
led by the State, of any tradei business, industry or service, whether to
the exclusion, complete or partial of citizens or otherwise. This
amendment also validated the operation of all existing laws insofar as
these had made similar provisions. Article 298 of the Constitution, as
G originally enacted, provided that the executive power of the Union
and of each State was to extend, subject to any law made by the
appropriate legislature, to the grant, sale, disposition or mortgage of
any property held for the purposes of the Union or of such State as the
case may be, and to the purchase or acquisition of property for those
purposes respectively, and to the making of contracts. and it .further
H provided that all property acquired for the purposes of the Union or of
-- D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI. CJ.I 187

State was to vest in the Union or in such State, as the case might be.
A
This Court referred to the decision of this Court in Sukhdev v.
Bhagatram Sardar Singh Raghuvanshi, [1975] 3 SCR 619, "the
Governing power wherever located must be subject to the fundamen-
tal constitutional limitations."

The High Court in the judgment under appeal was unable to B
accept the plea of alternative remedy and allowed the Writ Petition
and declared regulation 9(b) of the Regulations to be illegal and ultra
vires and as a consequence thereof the orders teuninating the services
of respondents Nos. 1 to 4 were quashed and these respondents were
deemed to be in the service of OTC and back wages and all other
benefits by way of annual increments were directed to be paid.
c
Learned Solicitor General of India contended before us that in
the facts and the circumstances of this case, there was sufficient
••
!I'
guideline in the Regulation 9(b) and the power of termination, pro-
perly read, would not be arbitrary or violative of Article 14 of the
Constitution. It may be mentioned that under the general law of con- D
tract of employment, which was commonly known as the 'law of
master and servant', which is not termed as law of employer and emp-
Ioyee, whether the contract of service is for a fixed period or not, if it
contained a provision for its termination by notice, it could be so
terminated. If there was no provision for giving notice and the contract
was not for a fixed period, the law implied an obligation to give a E
reasonable notice. Where no notice in the first case or no reasonable
· notice in the second case was given and the contract was wrongfully
terminated, such wrongful termination would give rise to a claim_ for
damages. In this connection, reference may be made to the observa-
tions of this Court in the five-judge bench decision in Union of India &
Anr. v. Tulsi Ram Patel, [1985] Supp. 2 SCR 131 at p. 166. This is also F
the position at common law. See Chitty on Contract; 26th Edition Vol.
II, p. 808 or 25th Edition Vol. II p. 712, paragraph 3490. In this
connection, reliance may also be placed at paragraphs 607 and 608 of
Volume No. 16, 4th Edition of Halsbury's Law of England.

Under the Industrial Law, subject to the relevant statutory pro- G
vision, the services of an employee could be terminated by reasonable
notice. In ·such a case it was always open to the Industrial Tribunal to
. examine whether the power of termination by reasonable notice was
.. exercised. bona fide or ma/a fide. If, however, the industrial Court was
satisfied that the order of discharge was punitive, that it was ma/a fide,
or that it amounted to _victimisation or unfair labour practice, the H
188 SUPREME COURT REPORTS ( 1990] Supp. 1 S.C.R.

industrial court was competent to set aside the order and in proper
A
cases, direct the reinstatement of the employee. Reference may also
be made to the observations of this Court in Tata Oil Mills Co. Ltd. v.
Workmen & Anr., (1964] 2 SCR 125 at 130. If, however, the exercise
of such power was challenged on the ground of being colourable or
ma/a fide or on account of victimisation or unfair labour practice, the
B employer must disclose to the Court the ground of his impugned
action, so that the same may be tested judicially. See the observations
of this Court in L. Michael & Anr. v. Mis Johnston Pumps India Ltd.,
( 1975] 3 SCR 489 at 498.

The relationship between a statutory corporation and its emp-
loyees is 'normally governed by the relevant rules, regulations and
c standing orders. A statutory Corporation is "State" within the mean-
ing of Artide 12 of the Constitution and its action is subject to judicial
review in certain cases and certain circumstances. In the facts and
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
D 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 Regula-
tion 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
E 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.

F 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 determi-
nation. 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
G 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 consis-
tently with the preservation of the employer's bona fide right to main-
tain discipline and efficiency in the industry for securing the maximum
H 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 A
observed that the record merely disclosed that the appellant had suspi-
cion 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
B
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 Corpo-
ration were unsatisfactory, this Court held that the powers of dismissal
after an inquiry and the powers of simpliciter termination are to dis-
tinct and independent powers and as far as possible neither should be
construed so as to emasculate the other or to render it ineffective. One c
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,
D
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 volunta-
rily 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 E
a group of which powers and duties are exclusively determined by law
and not by agreement between the parties concerned. See the observa-
tions 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 Con-
stitution) is subject to termination by notice. But beside the above, the F
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 G
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.
H
190 SUPREME COURT REPORTS [!990J Supjl. l S.C.R.

The atoresaid position of a government servant has been analy-
A
sed 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 plea-
sure 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
B 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
c 311 arises and the relevant clause is properly applied and the discipli-
nary inquiry dispensed with, the concerned government servant can-
not 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
D private interest where such livelihood is provided by the public,exche-
q uer 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 flexi-
E ble. 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
F 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.

G It must, however, be borne in mind that in some recent cases this
Court has taken the view that a regulation providing for the termina-
tion 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 Constitu-
tion. We have referred to the decisions of the Workmen of Hindustan·
Steel's case (supra); West Bengal State Electri~ity Board's case (supra)
H 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
A
decisions in the West Bengal State Electricity Board's (supra) and Cent-
ral 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. B
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.
c
l@arned Solicitor General submitted that this part of the above judg-
ments 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 D
corporation requires protection from employees who are inefficient or
those who lacked probity or even made faulty policy decisions. Refe-
rence 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 E
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. F
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 judg-
ment did not express opinion on the ,question of the Railway rule being
bad on th~ ground of unguided and uncanalised power. In his judg-
ment, Mr. Justice Das Gupta held that the rule gave no guidance and G
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 H
192 SUPREME COURT REPORTS I 19901 Supp. 1 s.c.R.
discrimination may be practised is wholly out of place.
A
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
B :and the service to be rendered, the importance of the effi-
cient 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
c · 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
D · 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 emp-
loyment of temporary servants and those on probation, and
E . 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
F 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
G 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
H 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
A
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 B
'public interest' can be sufficient guidance in the matter of retirement
of a government employee. See the observations of this Court in
Union of India 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 atten-
tion to the observations of. this Court in N. C. Dal wadi v. State of
Gujarat, (1987] 3 SCC 611paragraphs9 and. JO at page 619. It is well c
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 provi- D
sion. Reliance was placed on the decision of this Court in Commis-
sioner of Sales Tax, M.P., Indore & Ors. v. Radhakrishan & Ors.,
I 1979 J 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 E
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 F
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
, · of the law.

Learned Solicitor General submitted that the appeal involved
herein the power of Delhi Transport Corporation (a statutory corpora-
tion) 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 regula-
tions have been saved and even though in 1971 a new Corporation, viz.
the Delhi Transport Corporation (the af>pellant}, was' constituted H
194 SUPREME COURT REP0KfS [1990] Supp. 1 S.C.R.

under the Road Transport Corporation Act, 1950, the regulations
A
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"
B 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
c 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"
D 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,
E 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.

F 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
G 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
H limited and conditions, limitations and obligations may be implied or
,; D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 195

read into the statute in order to make it conform to constitutional
A
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 B
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 func-
tion within its limited powers. It would not, therefore, be expected to
have intended to transgress its limits. In Re The Hindu Women's Rights C
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: D

"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 inevit- E
ably 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 F
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 G
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. H
196 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A 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
B would be violative of Article 19(1)(g) of the Constitution if competi-
tions 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 limita-
tion which was not there. This principle was reiterated and applied by
c 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 involv-
D ing 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 interpreta-
tion would render them unconstitutional, the Court would lean in
favour of the former construction. The provisions of the sections read
E 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.
F Arora v. State of Uttar Pradesh, [1964) 6 SCR 784 where the question
was about the Constitutionality of section 41(aa) of the Land Acquisi-
tion (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.
G
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
H 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
A
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 B
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. c
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 legisla-
tion 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 some-
times. 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 E
Lal Sahu & Ors. v. Union of India, [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 of America 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 G
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 H
198 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

drew our attention that the present regulation, as mentioned hereinbe-
A
fore, 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 con-
strued. He submitted that it sould be spelt out that the regulation
requires rea5ons to be there, reasons which are germane and relevant.

B 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. Refe-
c rence may be made to the second proviso to Article 311 of the Con-
stitution. 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
E 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
F 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
G 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 obser-
vations of this Court in Minerva Mills Ltd. & Ors. v. Union of India &
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
A
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 of India
(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 of India 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
c
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 D
rights declared, unless the context indicates otherwise, against
every person or agency seeking to infringe them. See the obser-
vations of this Court in State of West Bengal v. Union of India,
[1964] 1 SCR 371 at page 438: ·

(b) Part III of the Constitution weaves a pattern of E
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 · F
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, con-
ferred by Article 21. See the observations of this Court in Olga G
Tellis's case (supra( at 80-81 and 85 of the report. Therefore, the
holding to the contrary in A. V. Nachane & Anr. v. Union of
.India & Anr., [1982] 2 SCR 246 is no longer good law.

In any event Counsel is right that the observations made at p. 259
of the report (supra) were in a different context and the challenge H
200 SUfREME COURT REPORTS [1990] Supp. l S.C.R.

based on Articles 19(1 )(g) and 31 does not appear to have any sub-
A
stance in resolving the present controversy before us. Mr. Ramamurthi
submitted that provision of any Rule that service shall be liable to termi-
nation on notice for the period prescribed therein contravenes Article 14
of the Constitution as arbitrary and uncontrolled power is left in the
authority to select at its will any person against whom action will be
B taken. See the observations of this Court in Moti Ram Deka's case
(supra) at p. 770 and 751 of the report.

It was submitted that Articles 14, 19 and 21 of the Constitution
are inter-related and the law must, therefore, now be taken to be well
settled that Article 21 does not exclude Article 19 and even if there is a
law providing a procedure for depriving a person of personal liberty
c (this will equally apply to life) and there is, consequently, no infringe-
ment of fundamental right conferred by Article 21, such law in so far as
it abridges or takes away any fundamental right under Article 19 would
have to meet the challenge of the Article. See the observations of this
Court in Maneka Gandhi's case (supra). Article 19(1)(g), it was urged,
D confers a broad and general right which is available to all persons to do
work of any particular kind and of their choice. See the observations·in
Fertilizer Corporation Kamgar Union's case (supra) at p. 60-61 of the
report.

According to Mr. Ramamurthi, there is a distinction between
E Public Employment or service and "pure master and servant cases".
He referred to the observations of this Court in India Tobacco Co.
Ltd. v. The Commercial Tax Officer, Bhavanipore & Ors., (1975) 2
SCR 619 at 657; followed in A. L. Kalra v. The Project and Equipment
Corporation of lndia Ltd., (1984) 3 SCR 646 at 664; Whenever, there-
fore, according to Shri Ramamurthi, there is arbitrarines in State Action
F . whether it be of the Legislature or of the Executive or of an authority
under Article 12, article 14 immediately springs into action and strikes
down such State action. In fact, the concept of reasonableness and
non/arbitrariness pervades the entire constitutional scheme and is a
golden thread which runs through the whole of the fabric of the Con-
·stitution. See the observations of this Court in Bandhua Mukti Morcha
G v. Union of Jndia & Ors., (1984) 2 SCR 79 at 101. A violation of a
principle of natural justice by State action is a violation of Article 14 of
the Constitution, which can be excluded only in exceptional circum-
stances. See'the observations of this Court in Tutsi Ram Patel's case
(supra) at 229, and at 233 of the report.

H It was, therefore, submitted that a clause authorising the
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJ!, CJ.] 201

employer to terminate the services of an employee whose contract of A
service is for an indefinite period or till the age of retirement, by
serving notice violates the fundamental rights guaranteed under Articles
14, 19( l)(g) and 21 of the Constitution for Article 21 is violated when
right to livelihood is taken away by termination of service of~ person;
employed for an indefinite period or till the age of retirement except
B
for proved misconduct. Assuming, it was argued, that in such a case
right io livelihood can be taken away by termination of service by
giving notice, nonetheless it could be validly done only, according to
Shri Ramamurthi, if:

(i) There is a fair and just procedure by way of-(1)
recording of reasons and (2) notice to show cause; c
(ii) And the right to terminate is restricted to exceptional
grounds.

When the service of a person employed for an indefinite period
0
or till the age of retirement is terminated, Shri Ramamurthi assets,
tl;1en Artice 14 is violated when there is no guidance for the exercise of
power and reasons are not required to be recorded and principles of
natural justice are abrogated. Similarly Article 19(1)(g) is violated,
according to him, for the reasons that there is no guidance, no require-
ment of reasons to be recorded and there is violation of the principles
E
of natural justice.

Shri Ramamurthi reminded us that before India- became inde-
pendent in 1947, the Indian Contract Act 1872 was applicable only to
British India on its own force. By Merged State Laws Act, 1949 it was
extended to the new provinces and merged States to the States of
Manipur, Tripura by Vindhya Pradesh by Union territories Law Act F
1950. It was also extended to the States merged in the States of
Bombay and Punjab by Bombay Act 4 of 1950 and Punjab Act 5 of
1950. With the promulgation of the Constitution, the Indian Contract
Act 1872 extends to the whole of India except the State of Jammu &
Kashmir. Shi Ramamurthi asserted the whatever might have been the
position in regard to the provinces comprised in British India before G
independence, as far as other areas, forming part of the Union of India
under the Constitution are concerned, only the Indian Contract Act
1872 is applicable. By article 372 of the Constitution, this Act has been
continued in operation even after the Constitution came into force
subject to the other provisions of the Constitution.
H
202 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A contract of service, according to Shri Ramamurthi is a species
A
of contrac~ and will, therefore, be governed by the provisions of the
Indian Contract Act 1872. This Act has been held to be an Amending
as well as a Consolidating Act. Therefore, there can be no question of
common law of England, as made applicable in India during the
British Rule, being the basis for deciding any question relating to
B contract of employment after 1950. In any event any provisions of
either the Indian Contract Act, 1872, or of the English Common Law
Applicable in British India before the Constitution came into force
would be void by reason of Article 13 of the Constitution if it infringed
any of the fundamental rights contained in Part III of the Constitution,
pleaded Mr. Ramamurthi before us. Under Section 2(h) of the Indian
Contract Act, 1872 an agreement (including an agreement of service)
c becomes a contract only when it is enforceable by law. If it is not
enforceable in law, it would be void by reason of section 2(g) of the
Contract Act. The question for consideration would, therefore, be
whether a clause in an agreement of service when it is for an indefinite
period or till the age of retirement providing for termination by giving
D notice would be enforceable? It was submitted by the workers' union
that it would not be enforceable if it violates the fundamental rights
guaranteed by Articles 14, 19(1)(g) and 21 of the Constitution. See the
observations of this Court in Moti Ram Deka's case (supra) at 709 of
the Report.' It was submitted that the broader submission was that
under our Constitution there can be no contract of employment pro-
E viding for termination of service by an employer of an employee by
giving notice, when the employment is for indefinite period or till the
age of retirement. In any event, such a clause cannot find a place
either in the contract of service or in the statutory provisions governing
the conditions of service in the case of public employment under the
'state' as defined in Article 12 of the Constitution.
F
Shri Ramamurthi urged that the observations contained in the
judgment of this Court in Tulsiram Patel's case (supra) at 166 of the
report, regarding the ordinary law of master and servant cannot be
construed as laying down the proposition that under the Indian law,
even if a contract of service is for an indefinite period or till the age of
G retirement, it can still be terminated by giving reasonable period of
notice. fo any event, even in the Common Law of E~!and, a distinction
is made . between public employment and "pure master and servant
cases" [See the observation-s of this Court in Sukhdev Singh's case
(supra) at page 657 of the report.
>

H Mr. Ramamurthi submitted that the doctrine of pleasure
D.T.C. v. D.T.C. MAZDOO~ CONGRESS [MUKHARJI, CJ.] 203

advanced by the learned Solicitor General of India was confined to
A
employment under the Union of India and States dealt with under Part
XIV, Chapter I of the Constitution and cannot and do not extend to
employment under local or other authorities referred to under Article
12 of the Constitution. There cannot be any pleasure by such authority
in respect of employment of the permanent employee. It was submit-
ted by Shri Ramamurthi further that even in cases of employment B
under the Union and the States, the pleasure doctrfoe is limited by the
express provisions of Article 311 of the Constitution. For that reason,
according to him, it has lost some of its majesty and power. He refer-
red us to the observations of this Court in Moti Ram Deka's case
(supra) at p. 704 and Tutsi Ram Pate/s's case (supra) at page 196.

In dealing with the question of validity of rules authorising the c
Government to terminate the services of temporary servants as upheld
by this court in Champak/al Chimanlal Shah's case (supra) and Ram
Gopa/. Chaturvedi's case (supra) it was submitted that it is important to
note that the validity of the rules was challenged on the ground of
denial of equality of opportunity in employment under the State D
guaranteed by Article 16 of the Constitution. In that context this Court
o·bserved at p. 201 (supra) of the report that there can also be no doubt,
if such a class of temporary servants could be recruited, there could be
nothing discriminatory or violative of egual opportuni!Y_ if the conditions
of service of such servants are different from those of permanent-emp-
loyees. It is thus apparent that tl)is Court, it was submitted, had no E
occasion to consider the reasonableness of a provision for termination
of service on giving notice under Article 14 of the Constitution and,
therefore, this decision can be of no assistance to the appellants. Shri
Ramamurthi submitted that since, audi alteram partem is a require-
ment of ArtiC!e 14, in view of recent decisions of this Court; and
conferment of arbitrary power itself is contrary to Article 14, the rule F
in question can, according to Shri Ramamurthi, no larger be sustained
as valid.

As far as the de_cision in Ram Go pal Chaturvedi's case (supra)
was concerned, Shri Ramamurthi submitted that the reasons given for
rejecting the argument that the rufe confers an arbitrary and unguided G
power are not valid for in Moti Ram Deka' case (supra), where the
view of. two_ learned judges of this Court who had held similar power to
be arbitrary had not ever been noticed. The observation that it is
impossible to define before hand all the circumstances in which the
discretion can be exercised and the discretion had necessarily to be left
to the Government, has not taken into consideration the circumstance H
204 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A that the denial of audi alteram partem which is a requirement of Atticle
14, can be only in exceptional circumstances and, therefore, such
circumstances have necessarily to be spelt out. This Court had no occa-
sion, according to Shri Ramamurthi, to consider the cumulative
impact of the fundamental rights guaranteed by Article 14, 19(1)(g)
and 21 of the Constitution.
B
Shri Ramamurthi sought to urge before us that industrial law
recognises the right of the employer to exercise, bona fide, the power
to terminate the services of workman by giving notice, except in case
of misconduct, which is unlike the law of master and servant. Shri
Ramamurthi urged that it is important to note that in all cases under
C industrial law, decisions have been rendered by industrial tribunal
when disputes had been raised by workmen challenging the action of
the employer terminating their services by giving notice, under the
terms of the contract of setvice or the Certified Standing Orders. The
question was never raised, nor could it be raised, before the Tribunals
that the very term in the contract of service or in Standing Orders
D would have to stand the test of Articles 14, 19(1)(g) and 21 of the
Constitution. Further a constitution bench of this Court had rejected
the contention that Industrial Tribunals should make a distinction bet-
ween public sector and private sector industries. Reliance was placed
on the observations of this Court in Hindustan Antibiotics Ltd. v. The
Workmen & Ors., (1987] 1 SCR 652 at 669. On the consideration of
E the relevant material placed before us, we are asked to come to the
conclusion that the same principles evolved by industrial adjudication
in regard to private sector undertals:ings will govern those in the public
sector undertakings having a distinct corporate existence. Therefore,
all the decisions referred to by the appellant, it was argued, and
interveners, were all concerned with applying the industrial law even
F though some cif them dealt with employees, working in statutory
corporations or public sector undertakings. It was, therefore, submit-
ted by Shri Ramamurthi that these decisions could afford no assistance
to the Court, in deciding the issues raised in the present case, where
the validity of a term of employment, permitting the employer to
terminate the services of a permanent employee by simply giving
G notice, is challenged on the ground that such a term violates funda-
mental rights guaranteed by Articles 14, 19(1)(g) and 21 of the Con-
stitution. It was submitted further that the constitutional guarantees
under Articles 14 and 21 of the Constitution are for all persons and
there can be no basis for making a distinction between 'workmen' to
whom the Industrial Disputes Act and other industrial laws apply and
H those who are outside their purview. The laws applicable to~ t~he former
D.T.C. v. D.T.C. MAZDOOR CONGRESS JMUKHARJI, CJ.] 205

can only add to and not detract from the rights guaranteed by Part III
A
of the Constitution.

It was important to note that all the decisions so far rendered by
this Court striking down rules and regulations or a provision in the
contract of Service, authorising termination of service of permanent
employees by giving notice relate to cases of non-workman arid we B
were referred to the decisions in West Bengal State Electricity Board's
case (supra), Central Inland Water Transport Corporation Ltd. 's case
(supra) and O.P. Bhandari's case (supra). There is the theory that
possibility of abuse of power is no ground for striking down the law.
Attention may be drawn to the observations of this Court in The
Collector of Customs, Madras v. Nathella Sampathu Chetty, [1962] 3
SCR 786 at 825 and Commissioner of Sales Tax, Madhya Pfadesh v. c
Radhakrishan & Ors. (supra). However, these decisions, it was sub-
mitted on behalf of the respondents, would have no relevance for the
present case because the power to terminate the services of .a person
employed to serve indefinitely or till the age of retirement can be
exercised only in cases of proved misconduct or exceptional circum- D
stances having regard to the Constitutional guarantee available under
Articles 14, 19( 1)(g) and 21 of the Constitution. Unless the excep-
tional circumstances are spelt out the power to terminate the services
would cover both permissible and impermissible grounds rendering it
wholly invalid, it was urged. This was particularly so because the
requirement of audi alteram partem which is a part of the guarantee of E
Article·14 is sought to be excluded. There can be no guidance available
in the body of the law itself because the purpose for which an under-
taking is established and the pro~isions dealing with the same in the
law can provide no guidance regarding exceptional circumstances under
which alone the power .can be exercised. The questiO!l involved, Shri
Ramamurthi emphasised, in these cases is not the exercise of power F
which an employer possesses to terminate the services of his employee
but the extent of that power.

Shri Ramamurthi drew our attention to the award and referred
to paragraph 5.Q___of .the Shastri Award and other provisions of the
award defining misconduct and also paragraph 522 of the Award deal- G
ing with the procedure for termination of employment and 523
onwards. Mr. Ramamurthi further submitted that provisions of Regu-
lation 9(b) of the Delhi Road Transport Authority (Conditions of
Appointment and Service) Regulations, 1952 cannot be rendered con-
·Stitutional by reading the requirement of recording reasons and confin-
ing_ it to cases where it is not reas~nably practicable to hold an enquiry .H
206 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R.

and reading it down further. as being applicable to only exceptional
A
cases wo~ld not be permissible construction and proper.

Shri Ramamurthi drew our attention to the true scope of Regula-
tion 9(b) of the aforesaid Regulations in the light of the judgment of
this Court in Balbir Saran Gael's case (supra). This rule, it has to be
B borne in mind, according to him, has been interpreted as applicable to
all cases of termination including termination for misconduct as
defined in the Standing Orders. In the aforesaid decision, at p. 761 of
the report, this Court observed that:

"Regulation 9(b) clearly provides for termination of ser-
vices in two modes: the first is where the services may be
c terminated without any notice or pay in lieu of notice. This
·can be done among other reasons for misconduct. The
·second mode is of terminating the services owning to
!. reduction of establishment or in circumstances other than
· those mentioned in clause (a) which relate to termination
D without notice. When termination is made under clause (b)
one month's notice or pay in lieu thereof is to be given to
the employee. Thus it is clear that if the employer chooses
to terminate the services in accordance with clause (b) after
giving one month's notice or pay in lieu thereof it cannot
amount to termination of service for misconduct within the
E ·. meaning of clause (a). It is only when some punishment is
' inflicted of the nature specified in Regulation 15 for mis-
conduct that the procedure laid down therein for an
.enquiry etc. becomes applicable."

If this was the true scope of the Regulation, Shri Ramamurthi
F contended, then it was obvious that it leaves the choice entirely to the
OTC Management either to proceed against the person for misconduct
by holding an enquiry or for the same misconduct terminate his
services by giving one month's notice. It is the conferment of such a
power that has been held to be unguided and arbitrary in all decisions
from Moti Ram Deka's case (supra) to the more recent decisions of this
G Court such as West Bengal Electricity Board's case (supra), etc. There-
fore, it was submitted that the argument based on the assumption that
Regulation 9(b) was confined to cases under than misconduct really
overlooked the interpretation placed upon this Regulation by this
Court. ·

H Shri Ramamurthi further submitted that if regulation 9(b) con-
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 207

fers this arbitrary power of leaving it to the OTC management to pick
A
and choose then it is plain that there is nothing in the provisions of the
Act or the regulations from which the OTC management can find any
guidance. It was, therefore, the submission of the respondents that in
order to conform to the Constitutional guarantees contained in Arti-
cles 14, 19{l)(g) and 21 of the Constitution as interpreted by this
Court, the first and foremost the regulation will have to make a dis- B
tinction between cases where services are sought to be terminated for
misconduct and cases of termination on grounds other than what
would constitute misconduct. As far as termination or dismissal on
ground of misconduct is concerned, ordinarily the detailed procedure
.- for establishing misconduct had to be followed. In cases where it is not
possible to follow the detailed procedure, then at least the minimum
procedure of issuing a show cause notice should be followed after c
recording reasons why it is not practicable to hold a full-fledged
enquiry. In cases where even this requirement of the elementary
principles of natural justice is not to be followed, then the regulation
must itself indicate those cases in which principles of natural justice
can be totally abrogated after recording reasons. 0

As far as termination of service of a permanent employee on
grounds which do not constitute misconduct is concerned, assuming
that this is held to be permissible, it can be only in very exceptional·
cases and that too after observing at least the elementary principle of
natural justice of asking for explanation before terminating the E
services and also recording reasons. Shri Ramamurthi urged that to
read all this into the regulations would literally mean re-writing the
regulations which is not permissible under any of the decisions or the
law.

As one of the cases cover termination under The Pun jab Civil F
Services Rules, 1952, Shri Ramamurthi drew our attention to some of
the provisions of these rules. He drew our attention to rule 3.12 which
provides that unless in any case it be otherwise provided in those rules,
a Government employee on substantive appointment to any _per-
manent post acquired a lien on that post and ceased to hold any lien
previously acquired on any other post. He also drew our attention to G
rule 3. 15( a) which provided that except as provided in clause (b) and
(c) of that rule and in note under rule 3.13, a Government employee's
lien on a post may, in no circumstances, be terminated, even with his
consent, if the result would be to leave him without a lien or a suspended
lien upon a permanent post. Clause (b) of rule 3.15 provided that
notwithstanding the provisions of rule 3.14(a), the lien of a Govern- H
208 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

inent employee holding substantively a permanent post shall be
A
terminated while on refused leave granted after the date of com-
pulsory retirement under rule 6.21; or on his appointment substan-
tively to the post of Chief Engineer of the Public Works Department.
And clause (c) of this rule provided that a Government employee's
lien on a permanent post, shall stand terminated on his acquiring a lien
on a permanent post (whether under the Central Government or a
State Government) outside the cadre on which he is borne. Note under
rule 3.13 speaks about a Government employee holding substantially
the post of a Chief Engineer of the Public Works Department, taking
leave immediately on vacating his post he then shall during the leave
be left Without a lien on any permanent post. The expression 'vacate'
used in the note refers only to vacation as a result of completion of
c tenure of attainment of superannuation.

Mr. R.K. Garg, appearing for the respondents in C.A. No. 4073
of 1986 stated that the Attorney General had rightly pointed out that
employee's services were terminated under Para 522 of the Shastri
D Award merely because he had failed to mention a loan of Rs.1.5 lakhs
taken from another Branch of the Bank. Mr. Garg pointed out that the
loan had been repaid. The failure to mention this loan had deprived
the appellant of his livelihood. The use of this power claimed under
Para 522 of the Shastri Award was not defended by the Attorney
General in this case. We had fairly conceded that he might not support
E this termination when the case is heard on merits. But, that does not
derogate from the wide amplitude of this uncontrolled, arbitrary
power claimed by the management under Para 522 of the Shastri .
Award. J>owers claimed under Para 522 must, therefore, be examined
in the background of the facts and circumstances of this Appeal. It was
submitted that this Court must hold that nothing in Para 522 of the
F Shastri Award confers on the management power so far as they can get
rid of permanent employees of the Banks merely after service of notice
on the imaginary belief that they were doing so for "efficient Manage-
ment" of the Banks. Mr. Garg reminded us that it is common
knowledge that all despots act as tyrants in the firm belief that the
intolerable indignities and atrocities they inflict, were necessary in
G public interest and to save the Society. Mr. Garg submitted that the
rule of law cannot be preserved if absolute, uncontrolled powers are
tolerated and fundamental rights or Directive Principles are allowed to
be reduced to a "dead letter".

Mr. Garg urged that the fundamental requirements of natural
H justice are not dispensible luxury. The express language of Para 522 of
D.T.C. v. D.T.C. MAZDOOR CONGRESS IMUKHARJJ, CJ.I 209

the Shastri Award is totally destructive of this requirement.
A
The express language as mentioned hereinbefore of Para 522 of
the Shastri Award provides:

"(1) In cases not involving disciplinary action for miscon-
duct and subject to clause (6) below. The employment of a B
permanent employee may be terminated by three months'
notice or on payment of three months' pay and allowances
in lieu of notice. The services of a probationer may be
terminated by one month's notice or ort payment of li
month's pay and allowances in lieu of notice."

Rule 148(3) reads:
·c

"(3) Other (non-pensionable) railway servants shall be
liable to termination on notice on either side for the periods
shown below. Such notice is not, however, required in
cases of dismissal or removal as a disciplinary measure after D
compliance with the provisions of Clause (2) of Article 311
of the Constitution, retirement on attaining the age of
superannuation, and termination of service due to mental
or physical incapacity."

"Note: The appointing authorities are empowered to E
reduce or waive, at their discretion, the stipulated period of
notice to be given by an employee, but the reason justifying
their action should be recorded."

Rule 148(4) reads:
F
"In lieu of the notice prescribed in this rule, ii shall be·
permissible on the part of the Railway Admirtistration fo
terminate the service of a railway servant by paying him the
pay for the period of notice."

Rule 149(3) reads: G

"Other railway servants: The services of other railway
servants shali be liable to termination on notice on either
side for the periods shown below. Such notice is not
• however, required in cases of dismiss8.I or removai as a
disciplinary measure after compliance with the provisions H.
210 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

of clause (2) of Article 311 of the Constitution, retirement
A
on attaining the age of superannuation, and termination of
· service due to mental or physical incapacity."

It was urged by Mr. Garg that the services of a permanent bank
employee cannot be terminated without charge of 'misconduct' and
B without an enquiry and the aforesaid paragraph gives no indication as
to on what conditions this arbitrary uncontrolled power can be used to
get rid of one or more permanent employees for "efficient manage-
ment of Banks" on subjective opinions or suspicion not tested in
enquiry into facts. It was further urged that this provision provides for
"insecurity of tenure" for lakhs of permanent employees, Articles 14,
19(1)(g) and 21 of the Constitution and the integrated protection of
c these Fundamental Rights excludes the "doctrine of pleasure" and
insists on security of tenure "during good behaviour". The right to
livelihood cannot be rendered precarious or reduced to a glorious
uncertainty", it was urged by Mr. Garg. Mr. Garg submitted that the
right to "hire and fire" was the prerogative claimed by the employer in
D the days of uncontrolled "laissez faire." This was the "doctrine of
pleasure of the Crown" in case of Government servants, who held
office during the pleasure of the King who had absolute powers over
his subjects. Articles 14, 19(1)(g) and 21 secure tbe rights of the citizen
and act as limits on the powers of the "State" in Democratic Republic
of India. Unjust, arbitrary, uncontrolled power of "premature" termi-
E nation of services of permanent employees should not be tolerated
according to Mr. Garg by the Constitution of free India.

In '·case of Government servants, Articles 311(1) and 311(2) of
the Constitution expressly restrict the "doctrine of pleasure" con-
tained in Article 310. Article 14 also insists on natural justice as was
F provided in Article 311(2), in order to prevent arbitrary use of power
of termination. Articles 19(1)(g) and 21 read together require just, fair
and reasonable procedure for termination of services for good cause.
Without these safeguards, employees are reduced to the status of
slaves of their masters. Employers are no longer masters as in the days
of slavery of feudal relations, Mr. Garg tried to emphasise. He submit-
t; ted that Article 14 of the Constitution did not permit permanent rail-
way employees to be exposed to termination of their services on.notice
without charge of misconduct or a reasonable opportunity to answer
the charge. Rules 148 and 149 of the Railway Establishment Code
which have been set only hereinbefore have the same effect, as is the
effect Of para 522 of the Shastry_Award, and_both these Rules were ..,-
1:1 declared unconstitutional in Moti Ram Deka's case (supra) by a seven
I
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJJ, CJ.) 211

Jµdges' Bench, according to Mr. Garg. A

RµJ~s 148 I'll~ H9 'Y~rco fo!!pd viql!!tive of Article 14 for two
reasons, it was sub1J1i!te4:

(i) Railw;ty servants in the Jllatter gf termination of service B
a
co11!d not fonn separate Class from other Government servants
(As per majority view, in the Judgment of Justice Gajendraga-
dkar, in_Moti Ram Deka'~ C\lse (1964) 5 SCR 683, 729-731).

(ii) Rule 148 conferred unguided, uncontrolled power of
tennination and, therefore, was hit by Article 14. (As per Justice
Subba Rao and Justice Das Gupta, in Moti Ram Deka's case C
fmp,m/, .
'
Mr. Garg ~011ghf tg 11rge {hqf this /Jir£/irc 4ffision '!f s~ye71
Judges' f!enc/i in Mori /?(lrn L!~l,a's (s!!pra) was applied in Gurdev
Singh Sidh11 v, Slate of f11njab & Anr., [1964) 7 SCR 587 at 592-593 by D
the Constitution Bench of five Judges to. strike down a Service Rule
which penniited compulsory retirement on completion of lO years'
services on the ground of 'inefficiency' etc. This Court held that Com-
pulsory retirement could not be tolerated even after 10 years of service
ill view of such retirement being not based on relevant considerations,
inE!H!!i!1~ t~P~ft~d longivity of life of the employees in India. If the . E
pPW~f pf f~IJ1PY111 !>Y 'Y!'Y qf Eompulsory retirement even after ten
y~l!T8 Wl!s h~I!! Hf!Ef:!ilS!itHtiqn~l in'Gui1ev Singh's case (supra) para
522 of the Sha§tri Aw11rd was f§r 11J9r@ ~rbi!fi•ry; u11ii!~! an~ \lllrea~g'l:
able, it wai; urged before us. . · '

It was reiterated before us that in view of the binding decision of
F
s~ye9 !udges in Moti Ram Deka's Case and its application by five
J11dges in 'Case of compulsory retirement after 10 years in Gurdev
~in?h's $Oas~ (~l]P.f~)! it i~ not ?Pe·n to the employees to submit that
~!fll/l!tF. powe~ c!a1111e~ f!n~.e~ P~F~S!~P~ ?2~ of the Shastri Awa:i:d,
!:Vfn W!*9!'! !Jl Yco~rs' serv/F!l fgr re1119yal ~!fh<?ll! charge of 'miscon- .
!!YR' i!P<I wi!hqf!t f!llquiry, can be uphelcl as constitutional on any G
jlrotl!ld~ wh!llsoewr, I! c111mqt !>co upheld,as constitutional on any
iin:rnmls wh~tsoever, It cam10! be dq11e :.vi!hout oi.:e_r-ru!ing Moti Ram
/Jfkq's rnse Pf withrm! aq l!lfPfESs Cfl!Jslit11tional provision.like second
Proviso (a), (li) Pr(~) to Article 3jl(2), w!J.ich was adopted.by the
Cim~tituent A&~embly, not !JY a i;ourt of !11w, !! was reiterated before
u~.
H
212 r . SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

It w~s submitted that no principle of interpretation permits read-
ing down a provision so as to make it into a different provision
altogether different from what was intended by the legislature or its
delegate. (R.M.D.C.'s case (supra).

It was urged that it was established law that on reading down a
B provisiq,n, Court cannot preserve a power for a purpose which is just
the opposite of what the legislature had intended. Para 522 of the
Shastri Award was not at all intended to be used within limits expres-
sed or implied. The Court must not legislate conditions such as were
adopted by the Constituent Assembly in case of second Proviso to
Article 311(2) in the Constitution of India. Even Parliament could not
graft such limitations o.n Article 311(2), if second Proviso to Article
c 311 was n'ot there in the Constitution. This Court cannot and ought. it
was submitted not to arrogate powers to legislate what was patently
outside even the competence of Parliament of India.

It was submitted that in Tulsi Ram Patel's Case, the majority
D decision could not hold second Proviso to Article 311(2) unconstitu-
tional. In order to give effect to the express language of second Proviso
to Article 311(2), Court denied the protection of Article 14 to permit
the President to terminate the services without following principles of
'natural justice' in cases covered by the said Proviso. In every other
case, natural justice is the command of Article 311(2) of the Constitu-
E tion was submitted.

The operation of Articles 14, 19(1)(g) and 311(2) of the Con-
stitution does not permit Courts to lay down essential legislative pol-
icy, such as was laid down by the Constituent Assembly to over-ride
311(2) of the Constitution. ·
F
Mr. Garg, therefore, submitted that the requirement of defining
'misconduct' in the Standing Orders and providing by meticulous pro-
visions foi a just, fair and reasonable enquiry into charges of 'miscon-
duct' are the mandatory requirement of Industrial Employment Stand-
ing Orders Act. (U.P State Electricity Board v. Hari Shankar Jain,
G [ 1979] 1SCR355/362-3).

Shri Garg urged that the I.L.0. Conventions, accepted by India,
required all employers to frame Standing Orders. He further urged
that the demands of natural justice, which form part of Article 14 of
the Constitution have been raised to the status of 'public policy' con-
H trolling section 23 of the Indian Contract Act. On that basis, clauses in
'.
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.J 213

contract of ~mployment which provide for removal from service on the
A
will of the employer have been condemned as 'The Henry VIII Clause'
(see the observations of this Court in Central Inland Water Transpor(s
case (supra) against the ethos of the Constitution of Socialist
Democratic Republic of India. In thfs connection, reference was made
to the decision of this Court in Central Inland Water Transport's case
(supra) and Maneka Gandhi's case (supra). In India, Shri. Garg sub- B
mitted, workers have a right to participate in the management. The
participation in the management cannot exclude the 'power to be
heard' and thus participate in a decision to remove a permanent
employee. Government alone has power to refer to the industrial
tribunal, Shri Garg submitted. He was against any reading down which
is contrary to the principles of interpretation. He referred to the obser-
vations of the Privy Council in Nazir Ahmed's case [AIR 1936 PC 253]. c
He submitted that if two provisions exist, firstly, to remove from
service after holding an enquiry on a charge of a 'misconduct'; and
secondly without serving a charge-sheet or holding an enquiry all pro-
visions for holding enquiry will be rendered otiose and will be reduced
to a mere redundancy. Such an interpretation will expose workers to D
harsher treatment than those guilty o.f misconduct, who will enjoy
greater protection than those who have committed no misconduct.
Such powers are patently discriminatory.

Reference under section JO of the Industrial Disputes Act would
serve no purpose, submitted Mr. Garg. Court has a duty, according to . E
him, to correct wrongs even if orders have been made which are later
found to be violative of any fundamental right and to recall its orders
to avoid injustice. He referred to the decision of this Court in A.R.
Antulay v. R.S. Nayak and Anr., [1988] 2 SCC 602. He reminded us
that no draft had been submitted by the Attorney General or the
Solicitor General, which could be added as a proviso to para 522 of the F
Shastri Award by this Court as a piece of judicial legislation to amend
the impugned para 522. Substantive provision of para 522 could not be
controlled or curtailed effectively so that its operation could be con-
fined within narrow constitutional limits. Mr. Garg_ reminded us•, that
it is not the duty of the court to condone the constitutional delin-
quencies of those limited by the Constitution if they arrogate uncon- G
trolled unconstitutional powers, which are neither necessary nor
germane for suppose'd efficiency of services in the Banks as a business
enterprise. Mr. Garg submitted that in a system governed by rule of
~ law, discretion when conferred upon executive authorities must be
confined within clearly defined limits. The rule of law from this point
means that decisions should be made by the application of known H
214 .SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

principles and rules and, in general, such decisions should be prediq,
A
able and the citizen should know where he is. Law caq only reac(j its.
finest moments when it h~~ fffefl 111~!1 from th~ ~nllmiteq.discretioq of
ruler. He referred to. *e obsef\'~tians of this Court in $.C. Jaising/lani
.- ¥: {Jnion ri.f fndia Of!fl (),rs., [ 1967] 2 !iCR 703 at p. 718-)9.
On tiepalf of !he Interveners in Civil Appeal No. 2876, Mr. P.P.
Rao submitted that the aforesaid decision in Tuls/ Ram Patel's case
(supra)_was an authority for the proposition that but for clause (b) of
the second proviso to Article 311(2) of the Constitution, the principles
of natural justice could not have been excluded from the .scope of
Article 14 of the Constitution. It was urged by him that the said seconq
proviso to Article 311(2) being itself a constitu!iqra.l 1m1visiq1i, suc!i
c exclusion was upheld by this Cp!J!"!.iq the saicl fulsi Ram Pa!e/'s case
(supra), p~ge 237 and at l~~t pafa tq p, 242. Mr, Rao clr~w our atten·
tion to the well-settleq n1le ofinterpret~tion ~nd submittecl that where
t\\P i!J!~rpre\a!ions 'Ir~ possible, one of wlliclJ would preserve and save
the constitµtion~lity of the p~rticular statutory provision while the
D other would rendei' it unconstitutional and void, the one which saves
and pr~serves its constitutionality should be adopted and the other
should be rejected. ffe, further, submitted that unless the provision of·
the Constitution itself excludes the principles of natural justice, they
continue to be applicable as lln.Jntegral part of the, rigM \q egµaliiy
guaranteed by the Constituti?H· / • -
E
. It was fqf!her reiterated that as the .employees of the DTC were
not Government employees, ArticJeJ 1!(2) of the Constitution was not
·applicable. Consequently, the second proviso thereof was also not
applicable, with· the result that Article 14 of the Constitution fully
·applied to them and it included the principles of natural justice as held
F in Tutsi Ram Patel's (supra) itself at p. 233, last paragraph. Mr. Rao
submitted that it is not permissible to read down statutory_proyisioµ~
when the avowed purpose is to confer power or 'In auth9rit.¥ withoqt
any limitation whatever. That would be reading down ro11trary !<J t/ie
expressed or manifest intention of the legislature, He dre'V ouf attention
lo tqe q~serv~tions pf !his Coµrt iq Miperya Mi/ls Limited v, Union of
G India & Ors., [1981] 1 SCR20q ;i\261, Therein, at p. 259 of the report,
it was reiterated that the principles of reading down could not be _;;
distorted even when word~ of widtq are used Inadvertently. In the
·--_ instant case, Mr, Raq submitted, reading down wQuld amount to dis·
tortion of the fight to eqµ~Jity conferred by Article 14, which was
. 'regarci~cl as a ba.sic featur~ pf the Con~titution. Nothing short of an •
H -amendment pf !hi: Con~titut!Cl_n could cut down the scope of the basic
D.T.C, v, D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 215

principle of eqilaiity; submitted M.r, Rao then rel'erfed!O us .Kesa- A
v1111a11tia Bhm·ati v, State of K~raia, li973] Stipp.·!· S.C.R. 1 .and
submitied that arty constiiutional amendment which impairs the
.. doctrine of equality would be iiiible to be declared unconstitutional on
the gMUttd of VttJlation of the basic structure of the Constitution.

lil the instant case, Mt. Rao submitted, regulation 9(b) deli- fi
berately conferred wide power of terniination of service without givilig
a reasonable opportunity to an empioyee even if he is a regular ot
permanent employee, in addition to regulation 15 which provided for
dismissal or removal after a disciplinary enquiry. Therefore, the inten-
tion of the regulation-making authority was cieat and lirtilmbiguous.
The provision is not capable of two interpretations. Consequently, the C
question of reading down did not arise. Mr. Rao drew out attention io
the observations of the Supreme Court of America ill Elliott Ashton
Welsh, II v. United States, 26 Lawyers' Edition 2nd, 308 at 327. Mt,
Rao submitted that the decisions referred to by the learned Attorney
General were not applicable to the instant case. He submitted that the
decision of the Federal Court in Re The Hindu Women's Rights to b
Property Act's case (supra) involved the interpretaiion of a single word
in the context of legislative competence. that was not the context of
the present controversy, submitted Mr. Rao. Mr. Rao stibmiited that
R:M. D. Chamarbaughwalla's case (supra) was a case on severability.
That was a case where the word 'competition' was interpreted. In the
present case, the su)\gested reading down involves, according to Mr. E
Rao, not interpretation of any single word in regulation 9(b) but
adding a whole clause to it which amounted to rewriting the provi-
sions. Courts have refused to rewrite legislation to make up for the
omissions of the legislature. Reliance was placed by Mr. Rao on
Nalinakhya 'Bysack v. Sh yam Sunder Halder & Ors., [1953] SCR 533,
at p. 544-545. Mr Rao referred to the observations of this Court in F
Kedat Nath Singh v. State of Bihar,)supra) involving the interpreta-
tion of section 124A !PC in the context of Article 19(!)(a) of the
Constitution. The content of Article 19(1)(a) was not cut down. In the
present case, the suggested reading down would inevitably drain out
Article 14 of its vitality.
G
Shri Rao drew our attention to the decision of this Court in R.L.
Arora v. State of Uttar Pradesh, .(supra) and submitted that the said
decision did not involve cutting down the scope of a fundamental right.
He also drew our attention to the decision of this Court in Jagdish
> Pandey v. The Chancellor, University of Bihar (supra) which did not
.involve re~ading down so as to sacrifice the principle of natural justice H
216 SUPREME COURT REPORTS (1990] Supp. 1 S.C.R.

which are considered an essential part of the rule of law. In Municipal
Committee, Amritsar & Anr. v. State of Punjab & Ors., [1969] 3 SCR
44 7, this Court was concerned with the intention of the legislature and
interpreted the Act consistent with the said intention. In the instant
case, the intention was to confer power of termination of services of all
categories of employees without any further enquiry. Sunil Batra v.
B Delhi Administration (supra) was again a decision where this Court
found that the intention of the legislature was not to confer arbitrary
power. In the instant case, the intention was different. N. C. Dalwadi
v. State of Gujarat, (supra) was a case of giving reasonable interpreta-
tion to a provision which was capable of such an interpretation. In the
scheme of DTC Regulations. regulation 9(b) was not susceptable to
C two interpretations. submitted Mr. Rao. According to Mr. Rao, the
principle of reading down was not applicable where the intention of
the law maker was to confer too wide a power intended to be exercised
without giving an opportunity to the affected party to be heard. It was,
therefore, submiited that the principle of reading down was not applic-
able and if applied would amount to cutting down the scope of Article
D 14 and subjecting permanent employees of the DTC to a tremendous
sense of insecurity which is against the philosophy and scheme of the
Constitution.

Mr Nayar, appearing in Civil Appeal No. 1115 of 1976-(Shri
Satnam Singh v. Zita Parishad Ferozepure) for the respondent, drew
E our attention to the fact that the appellant, Shri Satnam Singh was
appointed by the respondent vide letter of appointment dated 9th
March, 1961 the appellant ceased to work for the respondent, when his
services were terminated simpliciter vide Resolution dated 26th
November, 1965. He, therefore, had worked for the respondent only
for a short period of less than four years. The services of the appellant
F ceased on the basis of the contract, the terms of which were mutually
agreed between the parties. In case he had continued to work, he
would have reached the age of superannuation in the year 1984. His
total emoluments with effect from !st November, 1964 to 30th
September, 1984 would have been approximately Rs.2,46,464. Mr.
Nayar filed a detailed statement and stated that the appellant ceased to
G work for the respondent with effect from 26th November, 1964 when
he was discharged from service.

·In this case, it is necessary to bear in mind that the appellant,
Shri Satnam Singh was appointed by the respondent, Zila Parishad,
Ferozepure by letter of appointments dated 9th March, 196 I. The
H Boa~d approved his terms of appointment and the same were duly

''
218 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A that the discharge of the appellant amounted to dismissal and as
deafly no enquiry was held against him, the termination simpliciter
W!ls bad in law, The respondent, Zila Parishad filed an appeal in the
Court of ~td Additional District Judge, Ferozepure, who vide order
dated 22fid December, 1969 affirmed the decision of the trial Judge
B and dismissed the appeal of the respondent. The respondent filed
regular appeal in the High Court of Punjab and Haryana at Chandi-
garh, inter alia, pleading that the appellant was validly discharged in
terms bf his appointment order and rule l(i), Part V-A of the District
Board Rules, 1926.

The learned Single Judge of the High Court considered the
e matter in detail and referred to various judgments of this Court and
held that it could not be said that the action of termination prima facie
amounted to an order of dismissal even though the appellant was at the
time a confirmed employee of the respondent. The learned Single
Judge found that the respondent had a contractual right to terminate
the services of the appellant by giving a month's .notice or a month's
D
salary in lieu of notice. According to Shri Garg, the removal of the
appellant from service was in accordance with the terms governing his
appointment. Merely because on the 7th of November, 1964, the
respondent resolved to charge sheet the appellant for acts of omission
and commission and ordered an enquiry, and such an enquiry never
commenced, would certainly not be enough reason to hold that the
E
termination of the appellant's services, was ordered by way of punish-
ment and therefore, amounted to his dismissal, argued Mr. Nayar. It
was submitted by Mr. Nayar that the appellant had conceded that
condition no. 4 was legally good but he had argued that it was not
meant to be effective after the appellant had been confirmed.
F
Aggrieved by the order mentioned above, the appel\ant had filed
Letters Patent Appeal before the Division Bench of the High Court.
The Division Bench of the High Court by an order dated 13th
Septembe;-, 1972 referred the question of law for the decision of the
full bench. The full bench of the High Court reframed the question of
law as under:
G
"Whether, ihe termination of services of a permanent
District Board Employee by giving him one month's notice
or pay in lieu thereof in terms of the conditions of his
appointment and/or rule 1 in part V-A of the District
H Board Rules, 1926, is bad in law and caniiot be made?
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 219

The majority of the learned Judges, inter alia, held that the
A
appellant not being a government servant cannot have the protection
of Article 311 of the Consiitution as he was not a civil servant under
the Central Government of the State Government. . He was an
employee of the District Board and his tenure of appointment was
governed by the provisions of the District Board's Act, 1883 and the
rules framed thereunder as well as by the terms and conditions of his B
appointment. The condition no. 4 gave mutual right to the District
Board as well as to the appellant to terminate the service by giving one
month'.s notice or pay in lieu of notice, etc. The condition in the
appointment letter shall not be deemed to have been abrogated by the
Pun jab Civil Services Rules. The Court held further that the condition
stated in the letter of appointment of the appellant continued to bind
the parties even after the appellant's confirmation and his serVices c
could be terminated by an order of discharge simpliciter_in accordance
with the condition no. 4 thereof as this condition was almost in the
same terms as Rule I in Part V-A of the Rules. It was further held by
the full bench of the High Court that the Punjab Civil Service Rules
_had no over-riding effect and these rules were to apply in respect of D
matters for which no provision had been made anywhere else because
of the phrase used "so far as may be".

Rule 8.1 of the Business Rules reads as under:

"In all matters relating to the conditions of service of its E
employees the Board shall so far as may be follow the rules
from time to time in force for servants of the Pun jab
Government."

The finding of the Letters Patent Bench in this regard was as
under: ·F

"According to Rule 8.1 ibid, the Punjab Civil Services
Rules were to apply in resp_ect of matters for which no
provision had been made anywhere else because of the
phrase used "so far as may be". Naturally, if a provision
was made anywhere else, which went counter to the Punjab G
Civil Services Rules, the application of the latter rules
stood excluded. It thus follows that the Punjab Civil
Services Rules w·ere not to apply to the appellant in respect
of matters for which specific provision was made in his
letter of appointment, which constituted the contra~! of
\ se<vice ·between him and the District Board, as he _joined H
220 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

service on those terms after accepting the same."
A
The learned Chief Justice of Punjab & Haryana High Court,
however, dissented. The answer to the question, therefore, was given
in the negative vide order dated 3rd April, 1974. 'rhe Division Bench
of the High Court which heard the matter after the question of law was
B answered by the Full Bench, dismissed the appeal of the appellant vide
order dated 28th October, 1974 and this appeal to this Court arises
from this order.

The appellant in Civil Appeal No. 1115/76, who appeared in
person before us reiterated the relevant facts and urged that his
removal was bad and the rule under which he was removed may be
c quashed. It may be mentioned that as regards letter of Shri Kuldip
.Singh Virk to the Senior Superintendent of Police, Ferozepure reg_ard-
.ing the charges of corruption against the appellant, a case under s. 5(2)
of the Prevention of Corruption Act was registered. The appellant was
tried for the said alleged offence and acquitted of the charges by the
D SpeCial Judge Ferozepure, A further case was registered under ss. 381/
409 of 'IPC against the appellant. Accordingly, the appellant was tried
hy the Judicial Magistrate Ferozepure. The charge was framed b_y the
Judicial.Magistrate against the appellant. Against the aforesaid, the
appellant filed a petition 'in the High Court and the charge and the
proceedings in question were thereupon quashed by the High Court in
E July/August, 1967. There were three more cases tried by the Special
Judge, Ferozepure and acquitted.

The appellant filed a document in this Court claiming the mone-
tary claim on the basis that his termination was wrongful. According to
the appellant, he was entitled to recover Rs.4,83,061.90 paise. How-
F ever, according to the statement filed by Shri Nayar, learned counsel
for the respondents in this case, the appellant.was entitled to withdraw
from the District Board Rs.2,46,464.46 paise, in case he would have
been in service before his date of superannuation, i.e., 30th Septem-
ber, 1984. There is no evidence from either side as to whether the
appellant had worked somewhere else though the appellant did not
G work with the respondent because of his suspension. The appellant
had, however, stated that he did not so _w9rk. In that view of the
matter, if the contentions of the appellant a_!e accepted that the clause
under which the terms of employment of the appellant was agreed and
under which the termination was effected without any enquiry and
further in view of the fact that the learned trial Judge before whom the
H appe'llant had filed the suit first and decreed the suit declaring the
D.T.C. v. D.T.C. MAZDOOR CONGRESS IMUKHARJI, CJ.) 221

appellant to be entitled to be in service, the appellant, in our opinion.
should rightly be granted a monetary claim for Rs.4,83,061.90 paise
and further interest at 6% from 30th September, 1984. This would be
in consonance with justice and equity in the facts and the circum-
stances of this case. This order, however, will have to be passed if we
accept the contention on behalf of the appellant herein on the con-
struction of the clause. B
In the matter of Mis Indian Airlines, which is the subject-matter.
of the Application for Intervention No. 1 of 1990 in Civil Appeal No.
2846 of 1986, Mr. Lalit Bhasin, on behalf of the interveners contended
that there has been distinction between the discharge simpliciter and
dismissal from service by way of punishment. According to Mr. Bhasin
ihe .effect of the judgments of this Court in the Central Inland Water's c
case (supra) and West Bengal's (supra) was to take away the right of
the employer to terminate the services of an employee by way of
discharge simpliciter. According to Mr. Bhasin, this Court had recog-
nised the existence of the inherent right of an employer to terminate
the services of an employee in terms of the contract of employment D
and also under the various labour enactments.

Attention of this Court was invited to the provisions of the
liidusirial Employment (Standing Orders) Act, 1946, which applies to
all industrial esiabiishmehts whether in the public or private sector.
Under and as a part of ihe said Act, model standfog orders are set out E
and Standing Order No, 13 provides for simple termination of employ-
ment by giving Otie month's notice etc. Similarly, there are provisions
under various Shops arid Establishments Acts of different States pro-
viding fot termihatioh Of employment of permanent employee after
giving one month's notice at pay in lieu of notice. Attention of this
Court was invited to s. 30 of belh\ Shops and Establishments~ct. F

The Iiidlisttial Disputes Act itself makes distinction between dis-
charge and dismissal and atiention of this Court was invited to s. 2(oo)
of the Ihdi.Jstrial Disputes Act, whith defines 'retrenchment'. This
section expressly excludes termination of services as a ~esult of non-
renewal of contract of einploymenL Section 2(s) of the Industrial bis- G
putes Act defines 'Workman' to indude any person who has been
dismissed, discharged or retrenched. Section 2A distinguishes dis-
charge, dismissal and retrenchment.

. it is pertinent to point out that the Original Regulation B of
indiai\ Airlines Empioyees Service Regulations was set <out as "rrder: H
222 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A "13. The services of an employee are terminable at 30 days
on either side or basic pay in lieu:

Provided however, the Corporation will be at liberty to
refuse to accept the termination of his service by an emp-
loyee where such termination is sought in order to avoid
B disciplinary action contemplated or taken by the Manage-
ment."

After the decisions of this Court in Central Inland Water's case
(supra), Indian Airlines initiated steps to amend its Regulation 13 and
bring it in line with Article 311(2) of the Constitution as directed by
this Court in Hindustan Steels Ltd" case (supra). It appears that the
c Board of Directors of Indian Airlines had accordingly approved of the
amendments to Regulation 13 and the amended Regulation reads as
under:

. "(a) The services of an employee may be tenninated with-
D out assigning any reasons to him/her and without any prior
notice but only on the following grounds not amounting to
misconduct under the Standing Orders, namely:

(i) If he/she is, in the opinion' of the Corporation (the
Board of Directors of Indian Airlines) incompetent and
E · unsuitable for continued employment with the Corporation
and such incompetence and unsuitability is such as to make
his/her continuance in employment detrimental to the
interest of the Corporation;
OR

F • If his/her continuance in employment constitutes, in the
opinion of the Corporation (the Board of Directors of
Indian Airlines), a grave security risk making his/her con-
tinuance in a service detrimental to the interests of the
Corporation;
OR
G
if in the opinion of the Corporation (the Board of Directors
of Indian Airlines) there is such a justifiable lack of confi-
dence which, having regard to the nature of duties per-
formed, would make it necessary in the interest of the
Corporation, to immediately terminate his/her services.
H
D.T.C. v. D.T.C. MAZDOOR CONGRESS IMUKHARJI, CJ.) 223

(b) The employee can seek termination of his/her employ-
A
ment by giving 30 days notice or basic pay in lieu:

Provided however the Corporatibn will be at liberty to
refuse to accept the termination of his/her service by an
employee where such termination is sought in order to
avoid disciplinary action contemplated or taken by the
Management."

According to Mr. Bhasin, in the amended Regulation 13, Indian
Airlines had taken care to set out the circumstances in which the
services of an employee can be terminated by way of discharge and
without holding enquiry. Mr Bhasin urged that these are eventualities
which do not constitute misconduct and ·yet retention of an employee c
in the service by the management for any one of the grounds
mentioned in the aforesaid Regulation might be considered as detri-
mental for the management or against public interest. Mr. Bhasin
submitted that the power has been vested with the Board of Directors
and not with any individual. According to Mr. Bhasin, plain reading.of D
Regulation 13, as amended, would clearly establish that the vice. if
any, or arbitrariness is completely removed and sufficient guidelines
are made available to the highest {unctionary, namely, the Board of
Directors to exercise the restricted and limited power now available to
the employer under these Regulations.
E
Similar submissions have been made on behalf of Air India; who
are interveners. Submissions made hereinbefore were alternative sub-
missions. The original Regulation 48 of Air India Employees Service
Regulations was as follows:

''Termination: F

The _services of an employee may be terminated without
assigning any reason, as under:

(a) of a permanent employee by giving him 30 day's notice
in writing or pay in lieu of notice; G

(b) of any employee on probation by giving him 7 days·
notice in writing or pay in lieu of notice:
•
(c) of a temporary employee by giving him 24 hours· notice
in writing or pay in lieu of notice. H
224 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R

A Explanation: For the purposes of the regulation, the word
"" "pay" shall include all emoluments which would be admis-
sible if he were on privilege leave."

After the decisions of this Court declaring the aforesaid Regula-
tion as void in Civil Appeal No. 19 of 1982 in the Case of Manohar
B
P. Kharkar & Anr. v. Kaghu Raj & Anr., Air India amended the
aforesaid Regulation, which now reads as under:

"(a) The services of a permanent employee may be
terminated without assigning any reasons to him/her and
without any prior notice but only to the following grounds
c not amounting to misconduct under Service Regulation 42,
namely:

(i) if he/she is, in the opmmn of the Corporation (the
Board of Directors of Air India) incompetent and unsuit-
able for continued employment with the Corporation and
D
such incompetence and unsuitability is such as to make
his/her continuance in employment detrimental to the
interests of the Corporation;
OR
If his/her continuance in employment constitutes, in the
opinion of the Corporation (the Board of Directors of Air
India), a grave security risk making his/her continuance in
service detrimental) to the interests of the Corporation;
OR
If, in the op1mon of the Corporation (the Board of
F Directors of Air India), there is such a justifiable lack of
confidence which, having regard to the nature of duties
performed, would make it necessary, in the interest of the
Corporation, to immediately terminate his/her services.

(b) The services of an employee on probation may be
G terminated without assigning any reason to him/her but on
giving 30 days notice in writing or pay in lieu thereof.

(c) The services of a temporary employee may be termina-
ted without assigining any reason to him/her but on giving
15 days notice in writing or pay in lieu thereof.
H
D.T.C. v. D.T.C. MAZDOOR CONGRESS IMUKHARJI, CJ.] 225

Explanation For the purpose of this Regulation the word A
.. pay" shall include all emoluments which would be adrnis·
sible if he were on privilege leave."

The question regarding justification of the action taken by the
management was touched by this Court, but since the action was based
on the old Regulation 48, it had to be quashed. H was submitted on B
behalf of the Air India that care had been taken to suit the circum-
stances ·in which the services of an employee could be terminated by
way of discharge simpliciter and without holding enquiry. These are
eventualities which do not constitute misconduct and yet retention of
an employee in the service of the management for any one of the
grounds mentioned in the said Regulation might be considered as C
detrimental for the management or against public interest. It was sub-
mitted that the said regulation 48 has to be read with Regulation 44(A)
which reads as under:

"44(Al(i) Notwithstanding anything contained in these
Regulations and if, in the opinion of the Corporation (the D
Board of Directors of Air India), it is not possible or prac-
ticable to hold an enquiry under the relevant provisions of
these Regulations, the Corporation may, if satisfied that
the employee has been guilty of any misconduct, any one of
the punishment mentioned in Regulation 43 on the emp-
•Joyee .concerned. E

Provided that before exercising his extra ordinary power,
the Board shall give 30 days prior notice to the employee
concerned of the act of misconducl'that the reasons why it
. is not possible or practicable to hold an enquiry into such
misconduct, and the punishment proposed by the Board 'F
and the employee shall be entitled to make a full written
representation to the Board in response to such notice.

(ii) No action shall be taken under the Regulation untii the
Board has taken into consideration the representation
made by the concerned employee under the prqviso to G
Section (i) within the notice period."

The original regulation 44 was also modified. According to the
interneners, th_f cumulative reading of regulation 48, as amended, and
'f.egulaHon 44, aS.:amended, would clearly establish that the vice, if any,
•Of arbitrariness is completely removed and sufficient .guidelines are H
,.
226 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

made available to the Board of Directors to exercise the restricted and
A
limited power now available to the employer under these Regulations.

In C.M.P. No. 30309 of 1988, on behalf of the New India Assu-
rance Co., the intervention application was filed. It was stated that in
the courts below the writ petition No. 835 of 1975 was filed by the
B employee challenging his termination and the appeal filed thereon
were decided on grounds available to the petitioner at that time. A
special leave petition was filed by the employee concerned which has
now become C.A. No. 655 of 1984. After the judgment in the Central
Inland Water's case (supra), an additional ground is now being taken
to contend that a contract entered into way back in the sixties when the
employee concerned was an employee of the Orissa Cooperative
c Insurance Society Ltd., Cuttack could not be enforced now and the
same ought to be declared void in view of the Central Inland Water's
case (supra).

The intervention was allowed on 24th January, 1990 and Smt.
o Shyamla Pappu, Senior Advocate submitted written submissions. It
was submitted that adjudication on the merits and the consideration of
the facts and circumstances of the case may be left to the Bench hear-
ing the matter after the decision of the question of law referred to the
Constitution Bench.

E In this connection, it may, however, be noted that the General
Insurance was nationalised under the provisions of the General Insu-
rance Provisions (Nationalisation) Act, 1972 and the said Act came
into force on 20th September, 1972. Prior to this, General Insurance
(Emergency Provisions) Act, 1971 was passed under the provisions of
which Act ·all undertakings of all Insurers vested in the Central
F Government with effect from 13th May, 1971. This was pending
nationalisation which took place in 1972 as aforesaid.

Section 7(1) of the said Act which provided for the takeover of
former employees reads as under:

G "Every whole-time officer or other employee of an existing
Insurer other than an Indian Insurance Company, who was
employed by that insurer, wholly or mainly with his general
insurance business immediately before the appointed day,
shall, on the appointed day, become an officer or other
employee, as the case may be, of the Insurance Company,
H in which the Undertaking to which the service of the officer
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 227

or. other employee relates has vested and shall hold his
A
office or service on the same terms and conditions and with
the same rights to pension, gratuity and other matters as
would have been admissible to him if there had been no
such vesting and shall continue to do so until his employ-
ment in the Indian Insurance Company in which the under-
taking or part has vested, is terminated or until his remu- B
neration, terms and conditions are duly altered by that
Indian Insurance Company."

The original terms and conditions had not been altered and the
employees like the appellant in C.A. No .. 855/84 continued to be
governed by the original terms and conditions of the contract at the
time of termination. The original terms and conditions of employ-
c
ment, therefore, continued in force. The contract of service was
entered into when the appellant joined the Orissa Cooperative Insu-
rance Society Ltd. way back in 1961 and at the time of take-over by the
Central Government was the Divisional Manager of the said society.
After the take over by the Central Government of general insurance in D
1972, a great deal of reorganisation had to be effected in order to tone
up the system of general insurance which had become unwieldy due.to
the mushroom growth of societies with no control whatsoever when
insurance was in private hands-.

It was submitted by Smt. Shyamla Pappu that there are many
such cases where action was taken soon after nationalisation of general
insurance in 1972._If such orders are set aside today, Smt. Shyamla
Pappu posed the question, what would be the result? Would the order
set aside, at this stage give the employee a right to be reinstated? If the
answer to the: above is in the affirmative, would it be conducive to
efficiency in the c_onduct of a public utility such as general insurance, F
Smt. Pappu ra.ised the question. Would it not hamper the Company's
busines~ considering that the reduction/reorganisation of staff was
essential for the effective functioning of the pnhlic service? Smt.
Pappu asked the question would the public service not be saddled with
unnecessary and/or incompetent staff, thus, burdening the public
utility/service with unmanageable costs and staff that is ineffective? It G
was urged I.hat the New India Assurance Company had a clause, in the
contract at the relevant time, which was as follows:

"in the event of the society not having any further need of
any employees services, whether·permanent or temporary,
which shall be decided by the board, the Principal Officer H
228 SUPREME COURT REPORTS [ 1990) Supp. 1 S.C.R.

shall give 30 days notJce in writing for termination of his
A
services or in lieu thereof pay such employee a sum equiva-
lent to one month pay including allowar;.ce upto the period
of notice."

The above clause covered cases of retrenchment, abolition of
B posts and other situations which had been adjudicated upon by this
Court. If, however, the Central Inland Water's case (supra) is applied,
Smt. Shyamla Pappu submitted, then the management of the Inter-
vener Company will be powerless even in a case of abolition of posts or
retrenchment or any other allied situation. It is seen that the power to
terminate an employee is co-existent with the power to appoint. Smt.
Shyamla Pappu relied on the General Clauses Act and submitted that
c the Central Inland Water's case (supra) was erroneous in so far as it
made a complete negation of this power. Then, it was submitted by her
that in case of an employer who had made all the necessary investiga-
tion and the employee concerned ha> been fully heard before the order
of termination and if the decision of Central Inland Water's case was
D applied, then even such a case would be a case of illegal termination,
considering that there would be no power to terminate. It was submit-
ted that the Central Inland Water's case had to be read down because
paras 77, 92 and 93 of the report take in even private employment. The
sweep of the judgment cannot hold good and had to be curtailed.

E According t-0 Smt. Pappu, what then was the position of termina-
tions effected when the law was different? It cannot be said that they
are entitled to relief now. It should be clarified that the judgment of
this Court would apply prospectively, it was submitted. Past cases
might be treated as concluded in view of the law prevailing at that time
and also in view of the contentions urged by the parties in the courts
F below at various stages. In the event, this Court comes to the conclu-
sion that even old cases would be covered by the judgment ·now
rendered, the orders already passed may be upheld and a post-deci-
sional hearing might be directed so that the management concerned
h'as the opportunity of showing that there existed good reasons for
termination though the same were not communicated to the employee
G concerned because the law then existing did not .require such a c~m
munication. In the interest of justice, we should allow such a cours~.

In the light of the provisions and in the facts and the circum-
stances of the case, it is, therefore, necessary to consider the validity of
the power of termination of employment by the employers or auth-
H orities of the emp_loyees without holding any enquiry in the circum-
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 229

stances noted in the several civil appeals and applications herein.
A
In these civil appeals. the question of actual user of power is not
the main issue, but the validity of clauses or regulations containing the
aforesaid power. The instances of actual user of power, however, are
not wholly irrelevant on the question of the validity or extent of the
power because these explain the extent and content of power and/er B
occasion for such user. Firstly. we have to. in view of the facts and the
circumstances of the Civil Appeal No. 2876 of 1986, consider the
amplitude of the power under clause (b) of Regulation 9 of the Regula-
tions concerned. We have noted the contents of that Regulation. We
have also noted the amplitude of the expression of that power as was
canvassed before the High Court in the matter under appeal and as. C
noticed by the decision of this Court in Delhi Transport Undertaking v.
Balbir Saran Gael's case (supra). A su(vey of the several authorities of
law and the development of law from time to time would lead one to
the conclusion that the philosophy of the Indian Constitution. as it has
evolved, from precedent to precedent, has broaden the horizons of the
right of the employees and they have been assured security of tenures D
and ensured protection against arbitrariness and discrimination in dis-
charge or termination of his employment. This is- the basic concept of
the evolution from the different angles of law of master and servant or
in the evolution of employer and employee relationship. It is true that·
the law has travelled in different channels, government servants or
servants or employees having status have to be differentiated from E
those whose relationships are guided by contractual obligations.

But it has to be borne in mind that we are concerned in these
matters with the employees either of semi-Government or statutory
corporations or public undertakings who enjoy the rights, privileges,
limitati'ons and inhibitions of institutions who come within the ambit of F.
Article 12 of the Constitution. It is in the background of these
parameters that we must consider the question essentially and basi-
cally posed in these matters. The basic and the fundamental question
to be judged is. in what manner and to what extent. the employees of
these bodies or corporations or institutions could be affected in their
security of tenure by the employers consistent with the rights evolved G
over the years and rights emanating from the philosophy of the Con-
stitution as ai present understood and accepted.

We have noted the exhaustive and the learned analysis of the
background of the diverse facts projected in the several cases and
appeals before us. H
230 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A Efficiency of the administration of these undertakings is very
vital and relevant consideration. Production must continue, services
must be maintained and run. Efficacy of the services can be manned
only by the disciplined employees or workers. Discipline, decency and
order will have to be maintained. Employees should have sense of
participation and involvement and necessarily sense of security in
B semi-permanent or quasi-permanent or permanent employment.
There must be scope for enc9uragement for good work. In what
manner and in what measure, this should be planned and ensured
within the framework of the Constitution and,,power mingled with
obligations, and duties enjoined with rights, are matters of constitu-
tional a.djustment at any particular evolved stage of the philosophy of
our Constitution.
c
We have noted several decisions, numerous as these are, and the
diverse facts, as we have found. We have noted that in some cases
arbitrary action or whimsical action or discriminatory action can flow
or follow by the preponderance of these powers. The fact. that the
D power so entrusted with a high ranking authority or body is not always
a safe or sound insurance against misuse. At least, it does not always
ensure against erosion of credibility in the exercise of the power in
particular contingency. Yet, discipline has to be maintained, efficiency
of the institution has to be ensured. It has to be recognised that quick
actions are very often necessary in running of an institution or public
E service or public utility and public concern. It is not always possible to
have enquiry because disclosure is difficult; evidence is hesitant and
difficult, otten impossible. In those circumstances, what should be the
approach to the location of power and what should be the content and
extent of power, possession and exercise of which is essential for effi-
cient running of the industries or services? It has to be a matter both of
F balancing and adjustment on which one can wager the salvation of
rights and liberties of the employees concerned and the future of the
industries or the services involved.

Bearing in mind the aforesaid principles and objects, it appears
to us that the power to terminate the employment of permanent emp-
G loyment must be there. Efficiency and expediency and the necessity of
running an industry or ·service make it imperative to have these
pow.ers. Power must, therefore, with authorities to take decision
quickly, objectively and independently. Power must be assumed with
certain conditions of duty. The preamble, the policy, purpose of the
enacting provision delimit the occasions or the contingencies for the
H need for the exercise of the power and these should limit the occasions
D.T.C. v. D.T.C. MAZDOOR CONGRESS !MUKHARJI, CJ.] 231

of exercise of such powers. The manner in which such exercise of
A
power should be made should ensure fairness, avoid arbitrariness and
ma/a fide and create credibility in the decisions arrived at or by exer-
cise uf the power. All these are essential to ensure that power is fairly
exercised and there is fair play in action. Reasons, good and sound,
must control the exercise of power.
B
We have noted the rival submissions. Learned Attorney General
of India and the learned Solicitor General and others appearing for
those who sought for sustaining the power by the employers or the
authorities, contend that for efficiency of the industry, for the attain-
ment of the very purpose for which institutions are created, there
should be power to terminate the employment of undesirable, ineffi- C
cient, corrupt, indolent, disobedient employees in those cases where
holding of enquiry or prolonging these employees for that purpose
whould be detrimental, difficult and frustrating. It is in this context
that we should examine the power under the aforesaid Regulation
9(b). The power must be there, the power must be utilised by person
or authority, high ranking enough or senior enough who can be trusted D
or who can be presumed to be able to act fairly, objectively and inde-
pendently. The occasion for the exercise of the power must be
delimited with precision, clarity or objectivity. And those occasions
must be correlated to the purpose for which the powers are sought to
be exercised. In concrete terms, for the running of the industry or the
service, efficiently, quickly and in a better manner or to avoid dead- E
locks or inefficiency or friction, the vesting of the power in circum-
stances must be such that will evoke creditability and confidence.
Reasons must be there, reasons must be perspectable, reasons must be
relevant and the reasons niust be of authority independently, fairly
and objectively arrived at.
F
Notice of hearing may or may not be given, opportunity in the
form of an enquiry inay or not be given, yet arbitrariness and discri-
mination and acting whimsically must be av9ided. These power must,
therefore, be so read that the powers can be exercised on reasons,
reasons should be recorded, reasons need not always be communi-
cated, must be by authorities who are competent and are expected to G
act fairly, objectively and independently. The occasion for the use of
power must be clearly circuinscribed in the above limits. These must
also circumscribe that the need for exercise of those power without
holding a detailed or prolonged enquiry is there.

As we have noted,_ a good deal of controversy was that these H
232 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

inhibitions or limitations or conditions are not there in the amplitude
A
or the extent of the power enumerated or stated in Regulation 9(b) of
the .aforesaid Regulations concerned or of similar provisions that we
have examined in these cases.

We have noted the argument, learned and interesting, on the
B question of judicial law making imputing to the legislatures what these
have not articulated. Should the courts say or can say what the legisla-
tures have not said'! We have noted the controversy of how should
legislation of limited legislatures, Parliaments or rule making bodies,
who are not expected or enjoined to make rules or laws contrary to or
in derogation or the constitutional prohibitions and inhibitions be
read. We have been tempted to read down in the path of judicial law
c making on the plea that legislature could not have intended to give
powers to the authorities or employers which would be violative of
fundamental rights of the persons involved in the exercise of those
powers .and, therefore, should be attributed those powers on conditions
which will only make these legal or valid. Our law making bodies are
D not law into themselves and cannot create or make all laws. They can
only confer powers or make laws for the conferment of powers on
authorities which are legal and valid. Such powers conferred must
conform to the consitutional inhibitions. The question, therefore, is-is
it possible or desirable to read down the power conferred under Regu-
lation 9(b) or similar regulations permitting employer or the authority
E to terminate the employment of the employees by giving reasonable
notice or pay in lieu of notice without holding enquiry with the condi-
tions indicated or mentioned hereinbefore? Will it or will it not
amount to making laws of stating which the legislature or the law
making body has not stated"

F We have been reminded that judges should not make laws. But
1[ the,questiOn is-can the judges articulate what is inarticulate and what
can be reasonably and plainly found to be inherent on the presumption
that a legislature or a law making body with the limited authority
would act only within limitations so as to make the legislation or law
!l! valid and the legislature must be presumed to act with certain amount
G of knowledge and fairness protecting the rights of people ·Concerned
i~ and aiming at fairness in action? ·
•
We have noted the rival contentions. We have noted the submis-
sion that Mr. Garg, Mr. Ramamurthi and others invited us not to read
down and against legislating positively with conditions. But the
H question is-are those condltfori-s which we are ·invited to aitriliuie to
il
D.T.C. v. D.T.C. MAZDOOR CONGRESS [MUKHARJI, CJ.] 233

the legislature or the law making bodies contrary to or against the
A
manifest intention of the legislature?

Legislation, both statutory and constitutional, is enacted, it is
true, from experience of evils. But its general language should not,
therefore, necessarily be confined to the form that evil had taken.
Time works changes, brings into .existence new conditions and pur- B
poses and new aw.areness of limitations. Therefore, a principle ·to be
valid must be capable of wider application than the mischief which
gave it birth. This is particularly true of the constitutional construc-
tions. Constitutions are not ephemeral enactments designed to meet
passing occasions. These are, to use the words of Chief Justice
Marshall, "designed to approach immortality as nearly as human
institutions can approach it. .... ". In the application of a Constitutional
c
limitation or inhibition, our interpretation cannot be only of 'what has
been''but of 'what may be'. See the observations of this Court in Sunil
Batra v. Delhi Administration (supra). Where, therefore, in the
intepretation of the provisions of an Act, two constructions are possi-
ble, one which leads towards constitutionality of the legislation would D
be preferred to that which has the effect of destroying it. If we do not
read the conferment of the power in the manner we have envisaged
before, the power is liable to be struck down as bad. This, we say in
spite of the argument by many including learned Solicitor General of
India and Smt. Shyamla Pappu that in contractual obligations while
institutions or organisations or authorities, who come within the ambit E
of Article 12 of the Constitution are free to contract on the basis of
'hire and fire' and the theory of the concept of unequal bargain and the
power conferred subject to constitutional ·]imitations would not be
applicable. We are not impressed and not agreeable to accept that
proposition at this stage of the evolution of the constitutional philo-
sophy·of master and servant framework or if you would like to call it F
employer or employee relationship. Therefore, these conferments of
the powers on the employer must be judged on the constitutional peg
and so judged without the limitations indicated aforesaid, the power is
liable to be considered as arbitrary and struck down.

Whenever a statute comes. up for consideration_,jt mu_st be G
remembered that it is not within human powers to '.foresee the
manifold sets of facts which may arise, anfl, even if it were, it is not
possible to provide for them in terms free from all ambiguity. The
English language, and for that matter any language in use today, is not
an instrument .of mathematical precision. It has been said that our
literature would h~ve been much the poorer if.it were.Leaving, how- H
234 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

e1 er. the question of richness or poverty of our literature apart, we
A
must proceed on the assumption that human mind cannot foresee
everything. It has, therefore, been said that when a question arises
whether the power has been properly conferred and even if so, the
extent of it. Lord Denning has opined that a Judge in such a situation
cannot simply fold his hand and blame the draftsmen and look for new
B enactment. Lord Denning invites us to set to work on the construction
task of finding the intention of the Parliament or the law making body
and we must, however. do this not only from the language of the
statute. because, as we have seen, language is an imperfect medium
and very often thoughts are perpetually in search of 'broken
language'. But the judge must also do it from a consideration of the
social conditions which give rise to it, and of the mischief which it was
c intended to remedy and also in the light of the constitutional inhibi-
tions and then supplant the written words and add to it end give 'force
and life' to the intention and purpose of the legislatiure or the law
making authority. A judge must not alter the material of which a law
or an instrument is woven, but he can and should iron out the creases
D and tf one may venture to say, make articulate the inarticulate premise
but make articulate only which follow from necessary compulsions of
the situations and the constitutional position. See in this connection
the observations of Lord Denning in .. The Discipline of Law" at p. 12.

It is true that judicial j,ealously of legislature in law making has
E long been outdrawn, but the strict construction remains still an .
established rule. It is generally accepted principle that judges in
interpreting statutes, should give effect to the legislators' intent. By
doing so, the courts do recognise their subordinate position and their
obligation to help the legislature to achieve its purpose. But in that
effort, creativity is essential. There have been differences of opinion
F on the practices that the courts may employ in attempting to discover -
the legislative intent. In the beginning, conventional practice was only \_
to look to the words of the statutes. Now the entire spectrum has to be
examined. It has been said that judges are not unfettered glossators.

1t is true that there is no actual expression used enabling the
G legislation or the statute in question indicating the limitations or condi-
llons as aforesaid. But it must proceed on the premise that the law
making authority intended to make a valid law to confer power validly
or which will be valid. The freedom, therefore, to search the spirit of
the enactment or what is intended to obtain or to find the intention ot
the Parliament.gives the Court the power to supplant and supplement
H the expressions used to say what was left unsaid. This is a power which
D.T.C. v. D.T.C. MAZDOOR CONGRESS lMUK!!ARJI, O.J 235

is an important branch of judicial power, the concession of which if
A
taken to the extreme is dangerous, but denial of that power would be
ruinous and this is not contrary to the expressed intention of the legis,
lature or the implied purpose of the legislation. It was not as Shri
Ramamurthi tried to argue that legislature wanted to give an uncon-
trolled and absolute power to discharge employees on the part of the
employers without any enquiry, in all circumstances. That cannot be B
and that was not intended to be as can be implied from all the
circumstances.

In the aforesaid view of the matter, I would sustain the constitu-
tionality of this conferment of power by reading that the power !TlUSt
be exercised on reasons relevant for the efficient running of the
services or performing of the job by the societies or the bodies. It c
should be done objectively, the reasons should be recorded, it shouk!
record this and the basis that it is not feasible or possible reasonably to
hold any enquiry without disclosing the evidence which in the cir-
cumstances of the case would be hampering the running of the institu-
tion. The reasons should be recorded, it need not be communicaied·and D
only for the purpose of the running of the institution, there should be
factors which hamper the running of the institution without the termi-
nation of the employment of the employee concerned at that particular
time either because he is a surplus, inefficient, disobedient and
dangerous.
E
Construction or interpretation of legislative or rule provisions
proceeds on the assumption that courts must seek to discover and
translate the intention of the legislature or the rule-making body. This
is one of the legal fictions upon-the hypothesis of which the framework
of adjudication of the intention of a piece of legislation or rule pro-
ceeds. But these are fictional 1]1yths to a large extent as experience F
should tell us. In most of the cases legisl~(ure, that is to say, vast
majority of the people who are supposed to represent the views and
opinions of the people, do not have any intention, even if they have,
.they cannot and do not articulate those intentions. On most of these
issues their is no comprehens.ion or understanding. Reality would
reveal that it is only those who are able tp exert their viewpoints, in a G
common parliamentary jargon, the power lobby, gets what it wants,
and the machinery is of a bureaucratic set up who draft the legislation
or rule or law. So, therefore, what is passed on very often as the will of
the people in a particular enactment is the handy work of a bureau-
cratic machine produced at the behest of a power lobby controlling the
corridors of power in a particular situation. This takes the mythetical H
236 SUPREME COURT REPORTS [ 1990] Supp. 1. S.C.R.

shape of the 'intention of the people" in the form of legislation. Again,
A
very often, the bureaucratic machine is not able to correctly and pro-
perly transmute what was intended to be conveyed. In"such a situation,
is it or is it not better, one would ponder to ask, whether the courts
should attribute to the law-making body the knowledge of the values
and limitations of the Constitution, and knowledge of the evils that
B should be remedied at a particular time and in a situation that should
be met by a particular piece of legislation, and the court with the
experience and knowledge of law, with the assistance of lawyers
trained in this behalf, should endeavour to find out what will be the
correct and appropriate solution, and costrue the rule of the legislation
within the ambit of constitutional limitations and upon reasonable
judgment of what should have been expressed. In reality, that happens
c in most of the cases. Can it be condemned as judicial usurpation of
law-making functions of the legislature thereby depriving the people of
their right to express their will? This is a practical dilemma which
Judges must always, in cases of interpretation and construction, face
and a question which they must answer.
D 1
I have noted the guidelines for the exercise of the power, pream-
ble, relevant sections from which the reasons should be inferred and
recorded, although they need not be communicate. These should be
recorded in order to ensure effective judicial review in a given case.
Termination simpliciter under Regulation 9(b) or similar powers can •
E be exercised only in circumstances other than those in regulation 9(a).
The exercise of such powers can only be for purposes germane and
relevant to the statute. There are several illustratic;ms of that, namely,
the employee is incompetent or unsuitable so as to make his con-
tinuance in the employment detrimental to the interest of the institu- .,
a
tion, where the continuance of the employee is grave security risk
I\ F making his continuance detrimental to the inter.est of the Corporation
and where because of the conduct of the employee, there is lack of
confidence in the employee which makes it necessary in the interest of
the Corporation to immediately terminate the services of the
employee. These, however, are illustrative and not exhaustive. There-
fore, each case of the conferment of the power invloved should be
G decided on the aforesaid basis.

I am conscious that clear intention as indicated in a legislation
cannot be permitted to be defeated by means of construction. It has
been said that if the legislature has manifested a clear intention to
exercise an unlimited power, it is impermissible to read down the
H amplitude of that power so as to make it limited. I do not agree. Our
D.T.C. v. D.T.C. MAZUOOR CONGRESS [MUKHARJI, CJ.] 237

legislatures are limited by the constitutional inhibitions and it is time,
A
in my opinion, that we should read their Acts and enactments with the
attribute that they know their limits and could not have intended to
violate the Constitution. It is true that where there are clear, unambi-
guous and positive terms in a legislatio'n, the Court should be loath to
read down. It should proceed with a straight-forward method of strik-
ing down such legislations. But where the statute is silent or not expre- B
ssive or inarticulate, the Court must read down in the silence of the
statute and in the inarticulation of its provisions, the constitutional
inhibitions and fransmute the major inarticulate premise into a reality
and read down the statute accordingly. It is true· perhaps, as has been
said, that in the history of constitutional law, statutes are seldom read
down to mean what they say and intend. It is begging the question. If C
the statutes are seldom read down to mean what they say and intend. It
is begging the question. If the statute does not specifically say, in such
circumstances, as to how do we find the intention to transgress the
constitutional limitations. At least, the relevant provisions of the
relevant statutes and the rules, mentioned hereinbefore, are, in my
opinion, on these points, not expressive enough to betray an intention D.
transgress constitutional limitations. I am afraid that reference to
Elliott.Ashton Welsh, II v. ·united States, 39g·us 333; 26 L.Ed. 2d 308 is
inept in the background of the principles we are confronted with. The
plain thrust of legislative enactment has to be found out in the inarticu-
late expressions and in the silence of the legislation. In doing so, to say
what the legislature did not specifically say, is-not distortion to avert E
any con~titutional collision. In the language of the relevant provisions
with which we are confronted, I do not find that intention of the
legislature to flout the constitutional limitations.

I am also unable to accept the contention of Mr. Garg as well as
Mr. Ramamurthi that it is clear as a result of the constitutional posi- F
tion of the security of tenure of the employees as well as the expressed
language of the provisions of several enactments that there is no valid
power of the termination of employment of the permanent employees
without holding an enquiry or giving an opportunity to the employees
to rebut the charges on the grounds of termination in all circum-
stances. It was contended, as I have noted, by Shri R.K. Garg that no G
principle of interpretation permitted reading down a provision so as to
make it foto a different provision altogether diffe~ent from what\was
intel!ded by the legislature or its delegate. Reference was made to the
decision of this Court in R.M.D.C.'s case (supra). I am unable to
accept this contention. It is not that the reading down is used for a
purpose wh.ich is just the opposite whic~ _the legislature had intended. H
238 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R.

Legislature had not intended arbitrary or uncontrolled or whimsical
A
power. Indeed it considered. This is not the proper way to read that
power in the said Regulation 9(b ). Para 522 of the Shastri Award, read
properly, must be circumscribed with the conditions indicated above
as a necessary corollary or consequence of that power. It is also not
reading to the legislature conditions which were not there in the
B second proviso Article 311(2) of the Constitution. In view of the
ratio of the five-judge Bench decision of this Court in Tulsiram's case
(supra), which had examined all the relevant decisions, I am unable to
accept the submission of Shri R.K. Garg and Mr. Ramamurthi. Abso-
lute powers, it is true, cannot be regulated without essential legislative
policy, but here properly read, absolute power was not there. Power
that was only constitutionally valid, that power can be presumed to
c have been given and if that presumption is made, conditions indicated
above inevitably attach.

We are not concerned with the concept of industrial democracy
sought to be propounded by Mr. Garg in this case. The validity and the
D propriety of ha,,.ing industrial democracy is not in issue. What is in
issue is demonstrable fair play and justice, as sought for by Mr. Garg,
in the exercise of the power which must be conceded as an essential
attribute for proper functioning of the institution.

It is true that no drafts as such have been submitted by the
E lear11ed Attorney General or hy the learned Solicitor General nor by
any counsel appearing for the management. But these conditions, which
we have noted. are necessary corollary flowing from the conferment of
the power of termination in a constitutional manner for the smooth.
proper and efficient running of the industry.

F In the aforesaid view of the matter, I am unable to accept the
submissions of Mr. Garg and Mr. Ramamurthi. The power must be
there, the power must be read down in the manner and to the extent
indicated above, in my opinion, of terminating the services of per-
manent employees without holding any enquiry in the stated contin-
gencies and this would be by either virtue of the silence of the provision
G indicating the contingencies of termination or by virtue of constitu-
tional inhibitions. That reading would not violate the theory that
judges should not make laws.

In the aforesaid view of the matter, I direct that whenever ques-
tion of exercise of the power of termination of permanent employees
H by reasonable notice without holding any enquiry arises, the extent of
D.T.C v. D.'t.C, MAZDOOR CONGRESS IMUKHARJ!, CJ.[ 239

the power should be read in the manner indicated above and \Ve rei-
A
terate that such powers can be exercised for the purposes of the Act
which wili be determinable by the preamble and by relevant enacting
provisions and the contingencies for the exercise of the power must be
specified and powers should be exercised by authority competent and
indep.endent enough and should be articulated by reasons stated even
if not communicated. These are the limitations inherent arid latent .in
the framework of our Constitution and the power with these limita-
tions is valid.

Having regard to the aforesaid view, I will have to dispose of the
appeals in terms of the aforesaid principles.

Next the question arises-what would be the position of the
c
rights and liabilities determined as anterior to or before our reading
these powers to be conditioned as aforesaid. Having regard to the
finality of the position of law and having regard to the theory that
parties have adjusted their rights·on the understanding of the law as it
was, in our opinion, justice of the situation would be met if we declare D
and hold that pending litigations should be examined in the light of the
aforesaid principles and dispose of in the aforesaid light, namely.
where issues of damages or consequences of termination by virtue of
exercise of the power are still pending adjudication in any forum and
have not been finally adjudicated, these should be re-examined by the
appropriate authorities before whom these issues are pending in the E
light of these principles, that is say, the exercise of the power should be
judged on these conditions and in the light of those conditions. If in the
light of these conditions, the exercise of the power is valid, the termi-
nation should be held to be valid, if on the other hand, there was
· exercise without compliance with these conditions, the terminatiOn
would b~ invalid and consequences in law of damages or reinstatement F
or others will follow. But previous terminations where the !is is no
longer pending before any authority will not be reopened. To that
extent. I will declare.this to be the law prospectively.

I had, after circulating the draft judgment herein, the advantage
of the views of my learned brothers. They do not agree with me. With G
respect, I am definitely of the opinion that time has come for the
judicial interpretation lo play far more active, creative and purposeful
role in deciding w_hat is "according to law". Law as evolved in India
today, in my opinion, makes the limitations on user of power quite
clear and distinct, in this branch. These are constitutional limitations.
Therefore, every provision in any legislation by limited legislatures, in H
240 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A my opinion; should be judged bearing in mind that the legislature and
the law-making authorities were aware and are bound by these con-
stitutional limitations. These inhibitions must be read into these provi-
sions so that law becomes effective, purposeful and legal. In that view
of the matter, I am of the opinion that we should approach the ques-
tion of constitutional limitations or inhibitions in our interpretation in
B
deciding in each individual cases by not 'what has been' but 'what may
be'. This is the role and purpose of constitutional interpretation by the
apex Court of the country. I know that this view of mine is not shared
in this decision by my learned brothers. I respect their views, but I
would like to hope that one day or the other this Court would be
mature enough to fulfil what is purposeful and I believe to be the true
c role and purpose of the Court in interpretation in the light of constitu-
tional inhibitions. Having had the advantage of the views of my
learned brothers, I regret, with respect, I cannot join them in their
views. I am the loser for the same. but I will fondly hope only for the
time being.
D
I believe that we must do away with 'the childish fiction' that law
is not made by the judiciary. Austin in his Jurisprudent at page 65, 4th
edn. has described the Blackstone's principle of finding the law as 'the
childish fiction'. Chief Justice K. Subba Rao in J.C. Golak Nath &
Ors. v. State of Punjab & Anr., I 1967) 2 SCR 762 at p. 811 has referred
to these observations. This Court under Article 141 of the Constitution
E
is enjoined to declare law. The expression 'declared' is wider than the
words 'found or made·. To declare is to announce opinion. Indeed, the
latter involves the process, while the former expresses result. Interpre-
tation, ascertainment and evolution are parts of the process. while that
interpreted, ascertained or evolved is declared as law. The law
•i
•I declared by this Court is the law of the land. To deny this power to this
F Court on the basis of some outmoded theory that the Court only finds
law but does not make it, is to make ineffective the powerful instru-
ment of justice placed in the hands of the highest judiciary of this
country. See the observations of Chief Justice K. Subba Rao in /.C.
Go/ak Nath & Ors. v. State of Punjab & Anr., (supra at pp. 813/14). I
would, therefore, plead for a more active and creative role for the
G courts in declaring what the law is.

In the aforesaid light, in Civil Appeal No. 2876 of 1986, having
regard to the facts and the circumstances and the attitude taken by the
Delhi Transport Corporation, I do not intefere with the order of the
High Court. The appeal shall, therefore. fail.
H
D.T.C. v. D.T.C. MAZDOOR CONGRESS {RAY, J.) 241

Having regard to the facts and the circumstances and the obser-
A
vations above, Civil Appeal No. 655 of 1984 (M.L. Kamra v.
Chairman-cum-Managing Direcwr, New India Assurance Co. ) will be
placed before a division bench of this Court to be disposed of in
accordance with law and the light of the observations made herein.

For the reasons that I have indicated above, in Civil Appeal No. B
1115 of 1976 (Satnam Singh v. Zilla Parishad Ferozepur & Anr. ,), with
the facts herein where apparently no reasons were recorded, the
appeal of Satnam Singh succeeds and in the interest of justice, the
monetary relief should be given to the appellant which is quantified at
Rs.4,83,061.90 paise (Rupees four- lakhs eighty three thousand and
sixty one and ninety paise). I have indicated before the basis on which C
this quantification has been made.

For the same reasons, Civil Appeal No. 4073(NL) of 1986
(Mahesh Kumar Giroti v. Regional Manager, Region II, Regional
Office, State Bank of India, Bareilly & Ors.), Civil Appeal No. 331 of
1987 (The Delhi Transport Corporation & Anr. v. Shri Hans Raj), Civil D
Appeal No. 328 of 1987 (The Delhi Transport Corporation & Anr. v.
Shri Rohtash Singh), Special Leave Petition No. 75i2 of 1987 (Delhi
Transport Corporation v. Shri Mohinder Singh & Anr.), and Civil
Appeal No. 330 of 1987 (The Delhi Transport Corporation & Anr. v.
Shri Prem Singh) should be placed before the division bench of this
Court to be disposed of. in accordance with the observations made E
herein and in accordance with Jaw. The appeals I would dispose of
accordingly.

Intervention of the parties are allowed and the C.M.Ps. are dis-
posed of in the aforesaid terms.
F
RAY, J. I have had the privilege of deciphering the judgment
rendered by the learned Chief Justice; As the question involved in
these groups of appeals for decision i~ very important, it is deemed
necessary to express my views on this important matter.

The pivotal question which arises for consideration is whether G
Regulation 9(b) of the Regulations framed under section 53 of the
Delhi Road Transport Act, 1950 which provides for termination of
services of permanent employees on giving simply one month's notice
or pay in lieu thereof without recording any reason therefor in the
order of termination is arbitrary, illegal, discriminatory and violative
of Audi Altefam Partem Rule_and so constitutionaly invalid and void. It is H
242 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A also necessary to consider in this respect whether the said Rule 9(b) can
be interpreted and read down in such a manner to hold that it was not
discriminatory nor arbitrary nor does it confer unbridled and uncana-
lised power on the transport authority to. terminate, however, the
services of any employee including permanent employee without any
reason whatsoever by the Delhi State Transport Authority. It is also
B necessary to consider whether such a power can be exercised without
conforming to the fundamental right embodied in the Article 14 as
Interpreted by this Court in E.P. Royappa's case th.at arbitrariness is
the anti-thesis of equality enshrined in Article 14 of the Constitu-
tion. In other words, whether such a regulation has to comply with the
observance of fundamental rights guaranteed by Part III of the Con-
stitution and whether such a power is to be exercised in furtherance of
c and in consonance with the Directive Principles embodied in Article
38 and 39 of the Constitution.

It is convenient to set out the relevant provisions of Regulation
9(b) framed by the Delhi Road Transport Authority under the 1950
D Act. '

9(b) Termination of services

(b) Whether the termination is made due to reduction of establish-
ment or, in circumstances other than those mentioned in (a) one
E month's notice or pay in lieu thereof will be given to all categories of
employees.

On a plain reading of this Regulation it is apparent that the
authority has been conferred the power to terminate the services of
any employee whether permanent or temporary by giving the month's
F notjce or pay in lieu thereof without recording any reason whatsoever
in the purported order of termination of services. Thus a regular,
temporary or permanent employee of the State Transport Authority
can be dismissed or removed from service at the whims and caprices of
the concerned authority without any reason whatsoever and undoub-
tedly this evidence that such unbridled, indiscriminate ana uncana-
G lised power to terminate the services even of a permanent employee
without assigning any reason and without giving any opportunity of
hearing as far play and justice demands a reasonable procedure is per
se, arbitrary and discriminatory. It has been contended by the
Attorney General, appearing on behalf of the State that such a power
is not uncanalised or unbridled and arbitrary in as much as firstly such
Ii power has b.een conferred on the responsible authority namely D.T.C .
D.T.C. v. D.T.C. MAZDOOR CONGRESS [RAY, J.] 243

fot public purposes and secondly, the Regulation 9(b) is to be read
A
down so as to make it constitutionally valid. It will be seen that there is
guidance for exercise of this power in the regulation itself. It has also
been .submitted in this connection by the learned Attorney General
that a provision of the Constitution has to be presumed to be valid
unless it is proved by the other side challe.nging the constitutional
validity of such a provision that the same is arbitrary and so void. B
Several authorities have been cited at the Bar on this point.

It is profitable to refer to the earlier pronouncements of this
Court on this crucial question. Rules 148(3) and 149(3) in contraven-
tion of the provision of Article 14 of the Constitution were challenged
before this Court in the case Moti Ram Deka etc. v. General Manager,
N.E.F. Railways, Maligaon, Pandu, etc., [1964) 5 SCR 683. Rule c
148(3) of the Railways Establishment Code is set out here under:

"148(3) "Other (non-pensionable) railway servants:

The service of other (non-pensionable) railway servants D
shall be liable to termination on notice on either side for
the periods shown below. Such notice is not however
required in cases of dismissal or removal as a disciplinary
measure after compliance with the provisions of clause (2)
of Article 311 of the Constitution, retirement on attaining
the age of superannuation and termination of service due E
to mental or physical incapacity,'.'

In this case the .service of Moti Ram Deka, a peon employed by
the Railway and Sudhir Kumar Das a confirmed clerk, whose services
have been terminated under Rule 148(3) of the said Rules challenged
the termination of their services before the Assam High Court which F
rejected the same and ultimately it came up to this Court on Special
Leave. It was held by the Majority that Rules 148(3) and 149(3) are
invalid in as such as they are inconsistent with the provisions of Art.
311(2), as they purport to removal from service ofpermanent servaJ1lts
without compliance with the procedure prescribed by Article 311(2). It
was also held that the Rule 148(3) contravenes Art. 14 as it does not G
·give any guidance for exercise of the discretion by the authority con-
cerned and hence it is invalid.

It is necessary to refer in this connection to the pronouncement
of this Court in the case of Parshotam Lal Dhingra v. Union of1ndia,
[ 1958) SCR 828 where it has been held that protection of Article 311 is H
144 SUPREME COURT REPORTS {1990] Supp. I S.C.R.

available otily where dismissal, rernoval or reduction in rank is sought
A
to be inflicted by way of pUhishrnent and not otherwise. Thus even the
probationer or temporary employee if removed from service or dismis-
sed from service as a peMl measure having civil consequences has to
conform to the procedure prescribed by Article 311(2) of the Constitu-
tion. Even a probationer who has no right to the post cannot be
removed frorn service as a penal measure without complying with Arti-
cle 311(2) of the Constitution.

In the case of Sh yam Lal v. The State of Uttar Pradesh and Anr.,
[ 1955] SCR 26 it was held by this Court that a compulsory retirement
from service under the Civil Services (Classification, Control and
Appeal) Rules does not amount to dismissal or removal within the
c meaning of Article 31 I of the Constitution and therefore does not fall
within the provision of the said Act.

In the case of Shri Ram Krishna Dalmia v. Shri Justice S.R.
Tendolkar & Others, [ 1959] SCR 279 the constitutionality of the Com-
0 mission of Enquiry Act, 1952 was challenged. It was held that the Act
was valid and intra vires and that the notification was also valid except-
ing the words "as and by way of securing redress or punishment" in
Cl, 10 thereof which went beyond the Act.

It has been further held that it is now well settled that while
E Article 14 forbids class legislation, it does not forbid reasonable clas-
sification for the purposes of legislation. Thus, to pass the test of
permissible classification two conditions must be fulfilled, namely,·
that (i) That the classification must be founded on an intelligible
differentia which distinguishes persons or things that are grouped
together from others left out of the group and, (ii) that that differentia
f must have a rational relation to the object sought to be achieved by the
statute in question.

It has also been held that it must be presumed that the legislature
understands and correctly appreciates the need of its own people, that
its laws are directed to problems made manifest by experience and that
O its discriminations are based on adequate grounds.

This Court observed in Jyoti Pershad v. The Administrator For
the Union Territory of Delhi, {1962] 2 SCR 125 while holding that
Section 19 of the Slum Areas (Improvement and Clearance) Act, 1956,
was not obnpxious to the equal protection of laws guanmted by Art, 14
H of the Constitution, there was enough guidance to "the. competent
D.T.C. v. D.T.C. MAZDOOR CONGRESS !RAY; J.] 24)

authority iµ the use pf his discretion under Section 19(1) of the Act.
A
The restrictions imp9sed by Section 19 of the Act could not be said to
b~ unreasonable,

It has been .further observed that (1) If the statute itself or the
rule made .unc!er it applies uneql!ally to persons or things similarly
situate¢, it would be an instance of a direct violation of the constitu-
tional Guarantee and the provision of the statute or the rule in ques-
tion would have to be struck down.

(2) The enactment or the rule might not in terms enact a dis-
•
criminatory .rule o.f law but might enable an unequal or cliscriminatory
treatment to pe accorded to persons or things similarly situated. This
would happen when the legislature vests a discretion iii an authority,
c
be it the Government or an administrative official acting either as an
executive officer or even in a quasi-judicial capacity by a legislation
which does not lay down any policy or disclose any tangible or intelligi·
ble purpose, thus clothing the authority with unguided and arbitrary
powers enabling it to discriminate. D

In State of Orissa v. Dr. (Miss) Binapani Dei & Ors., [1967] 2
SCR 625 the respondent joined sendce of the State Government in
1938. 1ri tl)e service record certain date of birth was recorded. ln 1961
Government held enquiry as to date of birth and she was asked to
show cause why a certain .date of. birth should not be taken as a date of E
birth. The enquiry report was not disclosed to her and she was not
given any opportunity to meet the evidence. The Government refixed
her date of birth and ordered that she will be compulsorily retired. It
was held that such a enquiry and decision were contrary to the basis
concept of justice and cannot have any value. It is true that the order is
administrative in character, but even an administrative order which F
involves civil consequences as already stated, must be made consis·
tently with the rules of natural justice after informing the first respon-
dent of the case of State, the evidence in sµpport thereof and after
giving an opportunity to the first respondent of being heard and meet-
ing or explaining the evidence. No such steps were admittedly. taken;
the High Court was, in our judgment, right in setting aside the order of G
the State.

In A.K. Kraipak and Others v. Union of India and Others, [1969]
2 SCC 262 it has been held at page 268-269 Paragraph 13:

'"The dividing line petween an administrative power and a H.
246 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A quasi judicial .power is quite thin and is being gradually
obliterated. For determining whether· a power is an
administrative power or a quasi-judicial power one has to
look to the nature of the power conferred, the person or
persons on whom it is conferred, the framework of the law
conferring that power, the consequences ensuing from the
B exercise of that power and the manner in which that power
is expected to be exercised. Under our Constitution the
rule of law pervades over the entire field of administration.
• Every organ of the State under our Constitution is regu-
lated and controlled by the rule of law. In a welfare State
like ours it is inevitable that the jurisdiction of the
administrative bodies is increasing at a rapid rate. The
c concept of rule of law would lose its vitality if the instru-
mentalities of the State are not charged with the duty of
discharging their functions in a fair and just manner. The
requirement of acting judicially in essence is nothing but a
requirement to act justly and fairly and not arbitrarily or
D capriciously. The procedures which are considered inherent
in the exercise of a judicial power are merely those which
facilitate if not ensure a just and fair decision. . ...... .
What was considered as an administrative power some
years back is now being considered as a quasi'judicial
power.''
E
In the case of Union of India v. Col. J.N. Sinha and Anr., [1971)
! SCR 79 !. Col. J .N. Sinha was compulsorily retired by an order of the
President of India dated 13.8.69 under Section 56(j) of the Fundamen-
tal Rules from Government service without assigning any reason in the
order. The High Court on a writ petition against the impugned order
f held that there was violation of principles of natural justice.

On an appeal on Special Leave this Court held:

•"Rules of natural justice are not embodied rules nor can
they"be elevated to the position of fundamental rights. As
G observed by this Court in Kraipak and Ors. v. Union of
India "the aim of rules of natural justice is to secure justice
or to put it negatively to prevent miscarriage of justice.
These rules can operate only in areas not covered by any
law validly made. If a statutory provision can be read con-
sistently with the principles of natural justice, the courts
H should do so because it must be presumed that the legisla-
D.T.C. v. D.T.C. MAZDOOR CONGRESS [RAY, J.J 247

lure and the statutory authorities intend to act in accot· A
dance with the principles of natural justice. But on ihe
other hand a statutory provision either specifically or by
necessary implication excludes the application of any or all
the principles of natural justice then the court cannot
ignore the mandate of the legislature or the statutory
authority and read into the concerned provision the princi· B
pies of natural justice. Whether the exercise of a power
conferred should be made in accordance with· any of the
principles of natural justice or not depends upon the
express words of the provisions conferring the power, the
nature of the power conferred, the purpose fqr which it is
conferred and the effect of the exercise of that power."
c
It was held that Fundamental Rule 56(j) does not in tetth tetjtilre
that any opportunity should be given to the concerned servant to show
cause against the compulsory retirement. The order of the President
is, therefore, not bad as the authority bona fide forms that opinion.
0
In the case of Air India Corporation v. V.A. Rebello & Anr.,
AIR 1972 SC 1343 the service of the respondent was terminated under
Regulation 48 of the Air India Employees' Service Regulations. The
said Regulation 48 reads as under:

CHAPTER VIII-Cessation of Service E

xxxxxxxxxxxxxxxxxx

48. Termination: The service of an employee may be
terminated without assigning any reason, as under:
F
(a) of a permanent employee by giving him 30 days' notic;;
in writing or pay in lieu of notice;

(b) of an employee on probation by giving h.im 7 days'
notice in writing or pay in lieu of notice;
G
(c) of a temporary employee by giving !Jim 24·hours' notice
in writing or pay in lieu of notice.

In this case the complainant, V.A. Rebello was dismissed from
service under Regulation 48 by paying salary of 30 days in lieu of
notice. The order does not suggest any misconduct on behalf of the H
148 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

i::omplainant :and I! is no! possible to hold that th~ order was passed on
A any misconduct. This has been challenged by the complainant by filing
a complaint before the National Industrial Tribunal. Under Section
33-A of the Industrial Disputes Act, 1947 the order was challenged as
ammmhilg to dismissal from service. The Tribunal held in its award
ti) at the discharge of the respondent is not a discharge simpliciter but
in hr.ea~ of se.ction 33-A of Industrial Disputes Act and as such
t<faected the complaint to be considered oh the merits. On appeal by
Special Leave 'this Court whiie considering the purpose and scope of
S.ection 33(1) and 33(2) of the Industrial Disputes Act, held following
its decision in The Workmen <Jj Sadder Office Cinnamara v. The
Management, ll97l] 2 LabU 620as follows:

"That if the ter·mination of service is a colourabie exercise
of the power vested in the management or as a result of
·victimisation or unfair labour practice, the Industrial Tri-
bunal would have jurisdiction to intervene and .set aside
6U.ch a termination. In order to find out whether the order
j) .of termination is one of termination simpliciter under the
provisions of contract ·Or of standing orders. the Tribunal
has ample jurisdiction to go into all the circumstances
·which led to the termination simpliciter. The form of the
•Order of termination, is no! conclusive of the true natilre of
1the order, for it is possible that the form may be merely a
E cJ!mouflage for an order of dismissal for misconduct. It is.
tll;ierefore, open to the Tribunal to go behind the form of
tli.e order and look at the substance. If the Tribunal comes
to the conclusion that though in form the order amounts to
.termination simpliciter but in reality doaks a dismissal for
misconduct, it will be open to it to set aside the order~ as a
F coJourable exercise of power by the management .. ,

The same principles have also been reiterated in the later deci-
sion of this Court in Tata Oil Mills Co. Ltd. v. Workmen & Anr..
[ 1964] 2 SCR l25. It has been observed in this case:

G .. That the position of the industrial workman is different
from that of a Government servant because an industrial
employer cannot "hire and fire., his workmen on the basis
of an unfettered right under the contract of eiliployment,
that right now being subject to industrial adjudication; and
there is also on the other hand no provision of the Constitu-
H tion like Arts. 310 and 311 requiring consideration iii the -
D.T.C. v. D.T.C. MAZDOOR CONGRESS [RAY, J.] 249

case of industrial workmen." ..
A
It has
,
been
,
further
I
observed:

"That Regulation 48 'which has been set. out earlier as its
plain language shows does not lay down or contemplate any
defined essential pre-requisite for invoking 'its operation. B
Action 'under this Regulation can be validly taken by the
employer at his sweet will without assigning any reason. He
is not bound to disclose why he does not want to continue
in service the employee concerned. It may be conceded
that an employer must always have some reason for ter-
minating the services of his employee. Such ·reasons apart
from misconduct may, inter alia, by want' of full satisfaction c
\
\ with his '!verall suitability in the fact that the employer is
not fully satisfied with the overall result of the performance
·. of his· duties by his employee does not necessarily imply
misconduct on his part.'; . ·
. ( . . ' . .'
In the case of Maneka.Gandhi v, Union of India, [1978] 2 SCR
62 L The petitioner was issued a passport on June l, 1976 under the
!'ilssport Act, 1967. On the 4th July, 1977, the petitioner received a
letter dated 2nd July, 1?77, from the Regional Passport Officer. Delhi.
intimating to her that it was decided by the Government of India to
iJ11pound ner passport under s. 10(3)(c) of the Act "in public interest." E
The petitioner was required to surrender her passport within 7 days .
· from the receipt pf that Jetter. The petitione~ immediately addressed a
letter· to the Regional Passport Officer requesting him to furnish a
C()PY of the statement of reasons for making the order as provided in
Section 10(5), reply was seQt by the Government of India, Ministry of
External Affairs on 6th July 1977 stating inter alia that the Govern- F
ment decided "in the interest of the general public" not to furnish her
copy of the. statement of reasons for the making of the order. The
petitioner challenges the action of the Government in impounding her
a
passport by wrii petition. Sub~section ( 1) of Section 10 empowers the
Passport Authority io vary or cancel the end9rsement on a passport or
travel document or t() vary or cancel it_ on the conditions subject to G~
which a passport or travel document has been issued having regard to,
inter alia, the provisions of s. 6(1) or any notification under Section 19,
Sub-section (2) confers powers on the Passport Authority to vary or
cancel the conditions· of the passport or travel document on the appli- _
cation of the hotder of the passport or travel document and wit!i the •
previous approval of the Central Government, Sub-section (3) pro- H
250 SUPREME COURT REPORTS [1990) Supp. 1 S.C.R.

vides that the Passport Authority may impound or cause to be
A
impounded or revoke a passport ot travel doGunient on the grounds set
out in cl.( a) to (h). The order impounding the passport in the present
case was made by the Central Government under cl. (c) which reads as
follows:

B "(c) If the passport authority deems it necessary so to do in
the interest of the sovereignty atid integrity of India, the
security of India, friendly relations of India with the foreign
country, or in the interest of the general public."

It was held that the right to travel and go outside the country is
.itichided in the right to Personal Liberty.
c
In order to apply the test contained Iii Arts, 14 and 19 of the
Constitution we have to consider the objects for which the exercise of
inherent rights recognised by Art. 21 of the Constitution are restricted
as well ·as the procedure by which these restrictions are sought to be
•
D imposed, both substantive and procedural laws and actions taken
under them will have td pass the test imposed by Arts. 14 and 19,
whenever facts justifying the invocation of eitlier of these Articles may
be disclosed. Violation for both Arts. 21 and 19(1)(g) may be put
forward making it necessary for the authorities concerned to justify the
testrictiori imposed by ~hawing satisfaction of tests of validity contem-
E plated by each of these two Articles.

The tests of reason and justice cannot be abstract. They cannot
be divorced from the needs of the nation. The tests have to be
pragmatic otherwise they would cease to be reasonable. The discretion
left to the authority to impound a passport in public interest cannot
F invalidate the law itself.

The orders under Section 10(3) must be based upon some mate-
rial even if the material concerns in some cases of reasonable suspicion
arising from certain credible assertions made by reliable individual. In
an emergent situation, the impounding of a passport may become
G necessary without even giving an opportunity to be heard against such
a step which could be reversed after an opportunity is given to the
holder of the passport to show why the step was unnecessary.

It 'is well-settled that even if there is no specific provision in a
<
statute or rules made thereunder for showing cause against action
H proposed to be taken against an individual, which affects the right of
D.T.C v. D.T.C MAZDOOR CONGRESS [RAY, J.] 251

that individual the duty to give reasonable' opportunity to be heard will
be implied from the nature of the function to be performed by the
authority which has the power to take punitive or.damaging action.

An order impounding a passpo.rt must be made quasi-judicially.
This was not done in the present case. It cannot be said that a good
enough reason has been shown to exist for impounding the passport of
,. the petitioner. The petitioner had no. opportunity of showing that the
ground for impounding it given in this Court either does not exist or
has no bearing on public interest or that the public interest can be
better served m ' and
. some other manner. The order should be quashed
the respondent should be directed to give an opportunity to the
petitioner to show cause against any proposed action on such grounds
as may be available. c
Even executive authorities when taking administrative action
which involves any deprivation of or restriction on inherent funda-
mental rights of citizens must take care to see that justice is not only
done but manifestly appears t-0 be done. ·They have a duty to proceed in D
a way which is free from even the appearance of arbitrariness,
unreasonableness or unfairne!;s-. They have to act in a m3nner which is
patently 1m'partial and meets the requirements of natural justice.

It is also pertinent to refer in this connection the pronouncement
of this Court in the case of E:P: Royappa "'.State of Tamil Nadu and E
Anr., [1974]2SCR348.

"Equality and arbitrariness are sworn enemies, one belongs
to the rule of law in a public while the other to the whim
and caprice of an ab'solute monarch. Article 14 strikes at
arbitrariness in State action and ensures fairness and equa- p
lity of treatment. The principle of reasonableness which
.legally as well as philosophically, is an essential element of
equality or non-arbitrariness pervades Article 14 like a
brooding omni-presence and the procedure contemplated,
by Article 21 must answer the test of reasonableness in
order to be in conformity with Article 14, it must be right G'
and just and fair and .not arbitrary, fanciful or oppressive."
•. In the case of Municipal Corporation of Greater Bombay v.
Malvenkar and Ors., [1978] 3 SCR 1000 the services of respondent No.
2, a permanent clerk in the Bombay Electric Supply and Transport
Undertaking, which is run by the apJ>ellant were terminated from the H
252 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A
close of work on January 23, 1968 as her record of service was
unsatisfactory. The order of termination stated that the respondent
No. 2 should be paid one month's wages in lieu of notice and would
also be eligible for all the benefits as might be admissible under the
Standing Orders and Service Regulations of the Undertaking. The
'
respondent No. 2 made an application before the Labour Court under
B Section 42( 4) of the Bombay Industrial Relations Act contending that
the order terminating her services was invalid as it was not passed by
the competent authority as envisaged by the Standing Order and that
the so called Executive Assistant to the General Manager had no
authority to terminate her services because no validly sanctioned post of
that designation existed on 20th or 23rd January, 1968. It was also
c_ontended that the aforesaid oders besides _being ma/a fide was viola-
c tive of the principles of natural justice in as much as the same was
passed without holding any enquiry. The Labour Court dismissed the
application. The respondent's appeal before the President of the
Industrial Court was however allowed. The Industrial Court held that
the ,impugned orders bore only the initials of the Central Manager and
D therefore it was passed by an authority which was lacking in authority.
the wording "unsatisfactorv service record" cast a stigma and was
patently punitive attracting the non-observance of Standing Order No. i
26 which did not create an absolute right in the management to termi-
nate the services of an employee for misconduct without holding an
enquiry or giving her a fair opportunity of being heard. A Writ appli-
E cation filed by the appellant was dismissed holding inter a/ia that the.
appellant was dismissed holding inter a/ia that the fact that Standing
Order 26 required reasons to be mentioned in the order terminating
the services of an employee did not mean that an order of dismissal on
the ground of misconduct could be converted into an order of dis-
charge simpliciter by mentioning therein the nature of misconduct.
F
While allowing the appeal on Special Leave it was held by this •
Court that under Standing Order 26 powers have been given to the
Management in a.particular case and this question has to be deter-
mined having regard to the substance of the matter and not its form.
One is the power of holding disciplinary enquiry under clause (3) of
G Standing Order 21 read with standing Order 23 and the othe> is the
power to terminate the services of an employee by one calendar
month's written notice or pay in lieu thereof under Standing Order 26.
The question is as to which power has been exercised by the Manage-
ment in a particular case and this question has to be determined having -~
.... "
regard to the substance of the matter and not its form. There are two 71!11
H distinct and independent powers and as far as possible, ndther should
D.T.C. v. D.T.C. MAZDOOR CONGRESS_ {RAY, .J.J 253

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 A
other is the power to terminate simpliciter the service of an employee
without any other adverse consequences. Proviso (i) to clause ( 1) of
Standing Order 26 requires that the reason for termination of the
employment should be given in writing to the employee when exercise
ing the power of termination of services of the employee under Stand-
ing Order 26. The Management is required to articulate the reason
which operated in its mind lor terminating the services of the emp-
loyee. But merely because the reason must obviously not be arbitrary.
capricious or irrelevant, it would not necessarily in every case make
the order of termination punitive in character so as to require comp-
liance with the requirements of clause (2) of Standing Order 2 I read C
with Standing Order· 23. It was further held that the service of the
respondent was not satisfactory was undoubtedly based on past inci- .
dents set out in the record but for each of these incidents punishment is
one form or another had already been meted out to her and it was not
by way of punishment for any of these incidents, but because as
·gathered from these incidents, her record of service was unsatisfactory D
that her service was terminated by the management under Standing
· Order 26. The appellant produced satisfactory evidence to sliow that
the impugned order terminating the service· of the respondent was
justified and hence the impugned order must be sustained despite its
having been passed without complying with the requirements of clause
<. (2) of Standing Order 21 read with 'Standing Order 23. This decision
has been made in the special facts and circumstances in that particular
case.

In the case of Manohar P. Kharkhar And Anr. v. Raghuraj &
Anr., [ 1981] 4 LLJ 459 the petitioners challenged the order of termina-
tion of services dated 29.4.1981, under Regulation 48 of Air India p
Employees' Servi.ce Regulations .. The petitioner No. 1 was The
Director of Engineering and the Head of the Engineering Department
while the petitioner No. 2 was Deputy Director of Engineering
(Maintenance) and the Head of the Maintenance Division of the Air
India Corporation. The,Chairman and ¥•naging Director of the said
Corporation lost confidence in their ability and suitability to hold such G
important posts of Head of Departments which· were reasonable for
. maintenance of the Air Crafts, safety of the Air Crafts and safety of
the passengers carried therein and the order of termination were based
on the note of The Chairman dated 29.4. 1981. Loss of confidence was
the result of the negligence and failure to discharge their duty cul-
minating in the admitted sabotage in the case of Makalu, an air craft H
254 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

for the flight ofVVIP. On this occasion the petitioners services were
A
terminated on April 29, 1981 by the Chairman who recorded in its
record the ground of loss of confidence. This order was challenged as
arbitrary and capricious and Regulation 48 was violative of Article 14 of
the Constitution as it contained to guidelines for choosing between
employees and employees, occasion to occasion for the contemplated
I B action.

In negativing the contentions, it was held after axhaustively
analysing the note dated 29.4.1981, that sheer unsuitability and unfit-
ness to hold office is not a misconduct in its generic sense or in its
artificial meaning under Regulation 42. Regulations 42 to 44 have no
application. Confidence in the petitioners' suitability was lost due to
c such overall inefficiency of the departments under the petitioners.
Conclusions could not be different even if it assumed that the note
contemplated finding of the petitioners guilty of gross inefficiency and
negligenc_e. Inefficiency by itself did not amount to misconduct in its
generic sense .
.D
It was further held that the petitioners have no right to the post
and do not possess any security of tenure. It was also held that if the
Corporation choose to act under Regulation 48 and the action is not
ma/a fide, arbitrary or capricious the question of its having acted in
colourable exercise of its power co.uld not arise. It was further held
.E that the power conferred under Regulation .48 to terminate the
services of permanent employees on 30 days notice without assigning
any reason is not violative of Article 14 of the Constitution. Accord-
ingly the writ petition was dismissed and the rule was discharged. This
decision however has not duly considered the ratio of the decision
made by this Court irl L. Michael & Anr. v. Johnaton Pumps India
F Ltd., [1975] 3 SCR 489 and also in the case of Air India Corporation v.
V.A. Rebello, (supra) as well as the ratio of the decision in the case of
Sukhdev Singh & Ors. v. Bhagat Ram Sardar Singh Raghuvanshi & )
Anr., [1975] !SCC421.

In the case of S.S. Mu/ey v. J.R.D. Tata & Ors., '[1979) 2 SLR
G 438 constitutionality came up for consideration and this Court held the
said Regulation ,48 to be discriminatory and void as it gives unres- •
tricted and unguided power on the Authority concerned to terminate
the services of a permanent employee by issuing a notice or pay in lieu
thereof without giving any opportunity of hearing to the employee
concerned and thereby violating the principles of natural justice and
H also Article 14 of the Constitutio_n.
D.T.C. v. D.T.C. MAZDOOR CONGRESS [RAY, J.] 255

In West Bengal State Electricity Board & Ors. v. Desh Bandhu
Ghosh and Others, I1985] 3 sec 116 the first respondent, a permanent . A
e.rripl<,Jyee of the West Bengal State Electricity Board, filed the writ
petltio.n out of.which the appeal, arises in the Calcutta High Court to
quash an order dated March 22, 1984 of the Secretary, West Bengal
State Electricty Board terminating his. services as Deputy Secretary
with immediate effect on payment of three months' salary in lieu of B
three months' notice. The order was made under Regulation 34 of the
Board's Regulations which enables the Board to terminate the services
of any permanent employee 'by serving three months' notice or on
payment of salary for the corresponding period in lieu thereof." The
Regulation 34 reads as follows:

"34. Jn.case of a permanent employee, his services may be
c
terminated by serving three months' notice or on payment
of salary for the corresponding period in lieu thereof."

This order of termination was challenged·on the ground that
Regulation 34 was arbitrary in nature and it was patently discriminat- D
ory, The High Court struck down the first paragraph of Regulation 34
and q uash'ed the order of termination of service of the fii:st respondent.

" In the case of Workmen of Hindustan Steel Ltd. and Anr. v. Hindus-
tan Steel Ltd. and Ors., I1985] 2 SCR 428. Standing Order 32 which
provided for conferment of power in the General Manager to ter- E
minate th~ "'Fices of an employee if satisfied for reasons recorded in
wr!tillg that it was inexpedient or against tqe order of security to
<;mploy the workman, the workman could be removed or dismissed
from service without following the procedure laid down in Standing
Order 31.
F
"32. Special Procedure in certain cases.

Where a workman has been convicted for a criminal
offence in a Court of law or where the General Manager is
satisfied, for reasons to be recorded in writing, that it is
inexpedient or against the interests of security to continue G
to employ the workman, the workman may be removed or
dismissed from service without following the procedure
laid down in Standing· Order 31."

The appellant, an Assistant in the !st Respondent-undertaking
was removed from service on the ground that it was 'no longer expe- H:
256 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

dient' to employ him. The management dispensed with the departmen-
A
tal enquiry, after looking into the secret report of one of their officers
that. the appellant had misbehaved with the wife of an employee and
that a complaint in respect thereof had been lodged with the-police.The
Tribunal held that as the employer dispensed with the disciplinary
enquiry in exercise of the power conferred by Standing Order 32, it
B could not be said that the dismissal from service was not justified and
the respondent was quite competent to dismiss him from service with-
out holding any enquiry.

It was held that the reasons for dispensing with the enquiry do
not spell out what was the nature of the rnisconduct alleged to have
been committed by the .appellant and what prompted the General
c Manager to dispense with the enquiry.

As there was no justification for dispensing with the enquiry
imposition of penalty of dismissal without the disci~linary enquiry as
contemplated by Standing Order 31 is illegal and invalid.
D
It was further held that :-"A Standing Order which confers such
arbitrary, uncanalised and drastic power to dismiss an employee by
merely stating that it is inexpedient or against the interest of the secu-
rity to continue to employ the workman is violative of the basic req·
quirement of natural justice inasmuch as that the General Manager·
E can impose penalty of such a drastic nature as to affect the livelihood
and put a stigma on the character of the workman without recording
reasons why disciplinary inquiry is dispensed with and what was the
misconduct alleged .against the employees. It is time for such a public
sector undertaking as Hindustan Steel Ltd. to recast S.O. 32 and to
bring it in tune with the philosophy of the Constitution failing which it
1F being other authority and therefore a State under Art. 12 in 'an ap-
propriate proceeding, the vires of S.O. 32 will have to be examined. It
is not necessary to do. so in the present case because even on the terms
of S.O. 32, the order made by the General Manager is unsustainable."

In the case of Tata Oil Mills. Co. Ltd. v.. .Workmen & Anr.,
<J (supra) the service of Mr. Banerjee, an employee of the appellant, was
terminated on the ground that the appellant had lost confidence in him
.and inlieu of notice he was paid one month's salary. The Union to.
which Mr.Banerjee belonged took up his cause and on the failure of
ihe parties to reach 'a settlement the matter was referred to the Indust-
rial Tribunal. by the Government. It was contended before the Tri-
H bun al by the appellant that the order of termination of servi_ces of Mr~
D.t.C. v. D.T.C. MAZDOOR CONGRESS [RAY, J.j 257

Banerjee was art order bf discharge which it was competent to make
under R. 40(1) of .the Service Rules, whereas the respondent con-
A
tended that the termination was not a discharge simpliciter but was in
substane.e dismissal and that the "tribunal was entitled to consider the
propriety of the appellant's action.

The Tri)lunal held that it had jurisdiction to look into the reasons B
behind the discharge of an employee. Ort the examination of the
evidence the Tribunal found that no mala fides on the part of the
employer had been proved and that the termination of service did not
amount to victimisation or unfair labour practice. Even so it held that
the discharge was not justified and directed the reinstatement of Mr.
Banerjee.
c
"this Court held that in the matter of an order of discharge of an
employee the form of the order is not decisive. An Industrial Tribunal
has jurisdiction to examine the substance of the matter and decide
whether the termination is, in fact, discharge simpliciter or it amounts
to dismissal which has ptit on the cloak of discharge simpliciter. The D
test always has to be whether the act of the employer is bona fide or
whether it is a· ma la fide and colourable exercise of the powers confer-
red by the terms of contract or by the standing orders.

In O.P. Bhandari v. Indian Tourism Development Corporation
Ltd. and Others, [1986] 4 SCC 337. The question of constitutionality of E
Rule 3 l(V) of the Indian Tourist Development Corporation Rules
came up for consideration before this Court in this case. Rule 31 is
quoted below:

"31. Termination of services-The services of an emplo-
yee may be terminated by giving such notice or notice pay F
as may be prescribed in the contract of service in the fol-
lowing manner:

(v) of an employee who has completed his probationary
period and who has been confirmed or deemed to be con-
firmed by.giving him 90 days' notice or pay in lieu thereof." G

lt has been observed by this Court:

"this rule cannot co-exist with Articles 14 and 16( 1) of the
Constitution of India. The said rule must therefore die, so
that the fundamental ri~hts guaranteed by the aforesaid H
258 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

A constitutional provisions remain alive. For otherwise, the
guarantee enslirined in Articles 14 ancj 16 of the Constitu-
tion can be set at naught simply by framing a rule authoriz-
ing termination of an employee by merely giving a notice.
In 'order of uphold the validity of the rule in question it will
have to be held that the tenure of service of a citizen who
B takes up employment with the State will depend on the
pleasure or whim of the competent authority unguided by
any principle or policy. And that the services of an
employee can be terminated though there is no rational
ground for doing so. even arbitrarily or capriciously. To
uphold this right is to accord a "magna carta" t~ the
authorities invested with these powers to practice uncon-
c trolled discrimination at their pleasure and caprice on
considerations not necessarily based on the welfare of the
organisation but possibly based on personal likes and dis-
likes, personal preferences and prejudices. An employee
may be retained solely on the ground that he is asycop-
D hancy and indulges in flattery, whereas the services of one
who is meritorious (but who is wanting in the art of
sycophancy and tempermentally incapable of indulging in
flattery) may be terminated. The power may be exercised
even on the unarticulated ground that the former belongs
to the same religious faith or is the disciple of the same
E religious teacher or holds opinions congenial to him. The
power may be exercised depending on whether or not the
concerned employee belongs to the same region, or to the
same caste as that of the authority exercising the power, of
course without saying so. Such power may be exercised
even in order to .make way for another employee who is
F favourite of the concerned authority. Provincialism, cas-
teism, nepotism, religious fanaticism, and several other
obnoxious factors may in that case freely operte in the
mind of the competent authority on deciding whom to
retain and whom to get rid of. And these dangers are not
imaginary ones. They are very much teal in organisations
G where there is a confluence of employees streaming in from
different States. Such a rule is capable of robbing an emp-
loyee of his dignity, and making him a supine person whose
destiny _is at the mercy of the concerned authority (whom
he .must humour) notwithstanding the constitutional
guarantee enshrined in Articles 14 and 16 of the Constitu-
H ·tion .of India. To hold otherwise is to hold that the funda-
D.T.C. v. D.T.C. MAZDOOR CONGRESS IRAY, J.I 259

mental right embedded in Articles 14 and 16(1) is a mere A
paper tiger and that is so ethereal that it can be nullified or
eschewed by a simple device of framing a rule which
authorizes termination of the service of an employee by
merely giving a notice of termination. Under the circum-
stances the rule in question must be held to be unconstitu-
tional and void." B

This decision followed the observations of this Court in Central Inland
Wa1er Transporl Corporation Limi1ed And Another v. Brojo Naih
Ganguly and Another and Wes/ Bengal Slate Electricity Board v. Desh
Bandhu Ghosh and Ors., (Supra).

In Central Inland Water Transport Corporation Limiled and Another c
v. Brojo Nath Ganguly and Another, [1986] 3 SCC 156 the appellant
Corporation is a Government Company incorporated under the Com-
panies Act. The Majority shares of the Corporation are held by the
Union of India and the remaining shares are held by the State of West
Bengal and Assam. Article. 47 provided for appointment and re- D
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 exercised by the
Comptroller and Auditor-General in the matter of audit and accounts.
Article 51-A entitled the President to call for returns, accounts etc. of
the .Corporation. The respondents in the two appeals were in the E
service of the said company. Their appointment letters were in a
stereotype form under which the Corporation could without any pre-
vious notice terminate their services. A Scheme of Arrangement was
~ntered into between the Corporation and that company for dissolu-
tion of the latter and takeover of its business and liabilities by the
former. The Scheme inter a/ia stipulated that the Corporation shall F
take as many of the existing staff or labour as possible and that those
who could not be taken over shall be paid by the concerned 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 G
these dues. The two respondents were in the service of the said com-
pany and their services were taken over by the Corporation after the
Scheme of Arrangement was sanctioned by the High Court. The
respondent Ganguly 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 H
260 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

later promoted as General Manager (River Services).
A
Rule 9(i) of the Corporation's Service, Discipline and Appeal
Rules of 1979 provided that the services of a permanent employee
could be terminated on three months' notice on either side or on
payment of three months' pay plus DA to the employee or on deduc-
B tion of a like amount from his salary as the case may be in lieu of the
notice. A notice under Rule 9(i) was served on him terminating his
services with immediate effect by paying three months' pay. Both
Ganguly and Sengupta filed writ petition before High Court and a
Division Bench of that Court allowed the same.

The Corporation filed appeals before Supreme Court. The
c impugned questions for determination were (i) whether the appellant-
Corporation was an instrumentality of the State so as to be covered by
Articles 12 and 36 of the Constitution and (ii) whether an unconscion-
able term in a contract of employment entered into with the Corpora-
tion was void under Section 23 of the Contract Act and violative of
D Article 14 and as such whether Rule 9(i) which formed a part of the
contract of employment between the Corporation and its employees to
whom the said Rules applied, was void? This Court held that it being a
Government Company within the meaning of Article 12 of the Con-
stitution has to comply with the rights embodied in Part III of the
Constitution and the Directive Principles in Part IV_ of the Constitu-
E tion. It was fur.ther held that by extending the executive power of the
Union and each of the States to the carryi"ng on any trade or business.
Article 298 does not convert either the Union of India or any of the
States which collectively form the Union into a merchant buying and
selling goods or carrying on either trading or business activity. for the
executive power of the Union and the States, whether in the field of
F trade or business or in any other field. is always subject to constitu-
tional limitations and particularly the provisions relating to Funda·
mental Rights in Part III and is exercisable in accordance with and for
the furtherance of the Directive Principles of State Policy.

Rule 9(i) can aptly be called the 'Henry VIII Clause'. It confers
G an absolute. arbitrary and unguided power upon the Corporation. It
does not even state who on behalf of the Corporation is to exercise that
power. While the Rules provide for four different modes in which the
services of a permanent employee can be terminated earlier than his
attaining the age of superannuation, namely, Rules 9(i), 9(ii).
36(iv)(b) read with Rules 38 and 37, Rule 9(i) is the only rule which
H does not state in what circumstances the power conferred by the rule is

I
D.T.C. v. D.T.C. MAZDOOR CONGRESS (RAY, J.l 261

to be exercised. Thus even where the Corporation could proceed
A
under Rule 36 and dismiss an employee on the ground of misconduct
after holding a regular disciplinary inquiry, it is free to resort instead
to Rule 9(i) in order to avoid the hassle of an inquiry. No opportunity
of a hearing is at all to be afforded to the permanent employee whose
service is being terminated in the exercise of this power. It thus viol-
ates au di alteram partem rule of natural justice also which is implicit in B
Article 14. It is not covered by any of the situations which would
justify the total exclusion of the audi alteram partem rule. The view
that the Board of Directors would not exercise this power arbitrarily or
capriciously as it consists of responsible and highly placed persons
ignores the fact that however highly placed a person may be he must
necessarily possess human frailties and "power tends to corrupt, and
absolute power corrupts absolutely.·· c
Rule 9(i) is also discriminatory for it enables the Corporation to
discriminate between employee and employ·ee. It can pick up one
employee and applv to him Rule 9(i). It can pick up another employee
and apply to him Rule 9(ii). It can pick up yet another employ~e and [)
apply to him Rule 36(iv)(b) read with Rule 38 and to yet another
employee it can apply Rule 37. All this the Corporation can do when
the same circumstances exist as would justify the Corporation in hold-
ing under Rule 38 a regular disciplinary inquiry into the alleged mis-
conduct of the employee.
E
This court in Dt!/hi Transport Uncfertaking v. Balhir Sar~ui Goel.
[ 1970] 3 SCR 757 considered the question whether the services of a
permanent emplovee und~n Delhi Transport Undertaking coµJd be
termin.ated under -Regulatipn 9(b) of the Regul;ition without comply-
ing with the procedure prescribed by Regulation 15 and (ii) whether
although the order was made in perfectly harmless and innocuous F
terms purporting to be within Regulation 9(b) it was a mere camou-
flage for inflicting punishment for breach of Standing Order 17. 'lS the
respondent approached the High Court without exhausting the
Departmental remedies and held that the order was not proved to be
made n1ala fide on the part of the authority terminatiilg the service nor
the question of mu/a .tide was· gone into by the Courts below. 0

Regulation 9(b) empowered the authorities to terminate the
ser\ ice after giving one n1onth's notice or pay in lieµ thereof. Tbe
order '-'las held to have beep n1ade unequivocally in terms of the Regu-
lation 9(b l as the en1ployee \\.ias a contankeroUs person and it \Vas not
de~irab\e to retain him in service. Th~ order was uphe!d. The question H
262 SUPREME COURT REPORTS [ 1990) Supp. 1 S.C.R.

A whether Regulation 9(b) was illegal and void as it conferred arbitrary
and uncanalised power to terminate the service of a permanent emp-
loyee without recording any reason and without giving any opportun-
ity of hearing before passing tl1e purported order as required under
Article 14 of the Constitution was neither raised nor considered in this
case.
B
In L. Michael & Anr. v. Mis Johnston Pumps India Ltd., (supra)
the services of the appellant, an employee of the respondent, were
terminated by the latter giving him one month's notice as per. the
standing orders without assigning any reasons for the termination. An
industrial dispute was referred to the Labour Court. The management
alleged that the employee misused his position by passing an
c important and sacret information about affairs of the company to cer-
tain outsiders, that even after he was transferred to' another section he
made attempts to elicit information from the section with a view to
pass it on to outsiders, and that therefore, the management lost confi-
dence in the employee and terminated his services by a bona fide
.D order. The Labour Court confirmed the order.

On appeal this Court set aside the order holding that the Labour
Court has misled itself on the law. This Court directed reinstatement
of the employee with all back wages.

·E The manner of dressing up an order does not matter. The Court
will lift the veil to view the reality or substance of the order.

The Tribunal has the power and indeed the duty to X-ray the
order and discover its true nature, if the ;;bject and effect, if the
attendant circumstances and the ulterior purpose be to dismiss the
F employee"because he is an evil to be eliminated. But if the manage-
ment, to cover up the inability to establish by an inquiry, illegitimately
but ingeniously passes an innocent looking order of termination simp-
liciter, such action is bad .and is liable to be set aside. Loss of confi-
dence is no new armour for the management; otherwise security of
tenure, ensured by the new industrial jurisprudence and authenticated
G by a catend of cases of this Court can be subverted by this neo formula
Loss of Confidence in the law will be the consequence of the Loss of
Confidence doctrine.

An employer who believes and suspects that his employee
particularly one holding a position of confidence, has betrayed that
H confidence, can, if the conditions and terms of employment permit
D.T.C. v. D.T.C. MAZDOOR CONGRESS (RAY, J.) 263

terminate his employment and discharge him without any stigma
A
attaching to the discharge. Bw such belief or suspicion of the employer
should not be a mere whim or fancy. It should be bona fide and reason·
able. It must rest on some tangible basis and the power has to be exer-
cised by the employer objectively, in good faith, which means honestly
and with due care and prudence. If the exercise of such power is chal-
lenged on the ground of being colourable or ma/a fide or an act of B
victimisation or unfair labour practice. the employer must disclose to
the Court the grounds of his impugned action so that the same may be
tested judicially.

This Court in the case of workmen of Hindustan Steel Ltd. and
Anr. v. Hindustan Steel Ltd. and Ors., (supra) while considering the
constitutionality of Standing Order 32 of the Hindustan Steel Ltd. c
which conferred power on the General Manager to remov.e or dismiss
a workman without .following the procedure for holding a disciplinary
enquiry laid down in Standing Order 31 observed that:

"lt is time for such a public sector undertaking as D
Hindustan Steel Ltd. to recast S.0. 32 and to bring it in
tune with the philosophy of the Constitution failing which it
being other authority and therefore a State under Artic!e
12 in an appropriate proceeding, the ·views of S.0. 32 will
have to be examined."
E
It is convenient to refer in this context relevant passage m
paragraph 4 in Chitty on Contracts, 25th Edition, Volume 1:

"These ideas have to a large extent lost their appeal today.
'Freedom of contract', it has been said, 'is a reasonable
social ideal only to the extent that equality of bargaining F
power between contracting parties can be assumed, and no
injury is done to the economic interest of the community at
large.' Freedom of contract is of little value when one party
has rto alternative between accepting a set of terms pro-
posed by the other or doing without the goods or services
offered. Many contracts entered into by public utility G
undertakings and others take the form of a set of terms
fixed in advance by one party and not open to discussion by
the other. These are called 'contracts d'adhesion' by French
lawyers. Traders frequently contract, not on individually
negotiated terms, but ori those contained in a standard
form of contract settled by a trade association. And the H
264 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

terms of an employee's contract of employment may be
A
determined by agreement between his trade union and his
employer, or by a statutory scheme of employment. Such
transactions are nevertheless contracts notwithstanding
that freedom of contract is to a great extent lacking ...

B This Court has observed in Central Jn/and Waier Transport
Corporation Ltd. and Anr. v. Brojo Nath Gunguly and Anr .. (supra) as
under:

Article 14 of the Constitution guarantees to all
persons equality before the law and the equal protection ot
the laws. The principle deducible from the above discus-
c sions on this part of the case is in consonance with right and
reaSon, intended to secure social and economic justice and
conforms to the mandate of the great equality clause in
Article 14. This principle is that the courts will not enforce
and will, when called upon to do so, strike down an unfair
D and unreasonable contract. or an unfair and unreasonable
clause in a contract. entered into between parties who are
not equal in bargaining power ..... It will apply to situa-
tions in which the weaker party is in a position in which he
can obtain goods or services or means of livelihood only
upon the terms imposed by the stronger party or go without
E them."

The Court has. therefore. the jurisdiction and power to strike or
set aside the unfavourable terms in a contract of employment which
purports to give effect to unconscionable bargain violating Art. 14 of •
the Con<titution. {
F
Thus on a conspectus of the catena of cases decided by this Court
the only conclusion follows is that Regulation 9(b) 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
G order and without giving any opportunity of hearing to the employee
before passing the impugned order is wholly arbitrary, uncanalised
and unrestricted violating principles of natural justice as well as Arti-
cle 14 of the Constitution. lt has also been held consistently by this
Court that the Government carries on various trades and business
activity through the instrumentality of the State such as Government
H Company or Public Corporations. Such Government Company or
D.T.C. v. D:T.C. MAZDOOR CONGRESS [RAY, J.J 265

Public Corporation being State instrumentalities are State within the
A
meaning of Article 12 of the Constitution and as such they are subject
io the observance of fundamental rights embodied in Part III as well as
to conform to the directive principles in Part IV of the Constitution. In
other words the Service Regulations or Rules framed by them are to be
tested by the touchstone of Article 14 of Constitution. Furthermore,
the procedure prescribed by their Rules or Regulations must be B
reasonable, fair and just and not arbitrary, fanciful and unjust. Regu-
lation 9(b), therefore, confers unbridled, uncanalised and arbitrary
power on the authority to terminate the services of a permanent emp-
loyee without recording any reasons and without conforming to the
principles of natural justice. There is no guideline in the Regulations
or in the Act, as to when or in which cases and circumstances this
power of termination by giving notice or pay in lieu of notice can he c
exercised. It is now well settled that the 'audi alteram partem' rule
which is 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 D
Act or Regulation or Rule which is not the case here. Rules of natural
justice do not supplant but supplement the Rules and Regulations.
Moreover, the Rule of Law which permeates our Constitution
demands that it has to be observed both substantially and procedurely.
Considering from all aspects Regulation 9(b) is illegal and void as it is
arbitrary, discriminatory and without any guidelines for exercise of the E
power. Rule of law posits that the power to be exercised in a manner
which is just, fair and reasonable and not in an unreasonable, capri-
cious or arbitrary manner leaving room for discrimination. Regulation
9(b) does not expressly exclude the application of the 'audi.alteram
partem' rule and as such the order of termination of service of a per-
manent employee cannot be passed by simply issuing a month's notice F
under Regulation 9(b) 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 of which the purported order is
made. ·

It will be profitable to refer in this connection the observations of G
this Court in the case of Union of India and Anr. v. Tulsiram Patel and
Ors., [1985] Supp. (2) SCR 131 where the constitutionality of provi-
sions of Art. 311 particularly the 2nd proviso to clause (2) of the said
Article came up for consideration. This Court referred to the findings
in Roshan Lal Tandon v. Union of India, [ 1968] 1 SCR 185 wherein it
was held that though the origin of a Government service is contractual H
266 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

yet when once appointed to his post or office, the Government servant
A
acquires a status and his rights and obligations are no longer deter-
mined by the consent of both the parties, but by statute or statutory
rules which may be framed and altered unilaterally by the Govern-
ment. In other words, the legal position of a Government servant is
more one of status than of contract. The hall-work of status is the
B attachment to a legal relationship of rights and duties imposed by the
public law and not by mere agreement of the parties. It has been
observed that Art. 14 does not govern or control Art. 311. The Con-
stitution must be read as a whole. Art. 311(2) embodies the principles
of natural justice including audi alteram partem rule. Once the applica-
tion of clause (2) is expressly excluded by the Constitution itself, there
can be no question of making applicable what has been so excluded by
c seeking recourse to Article 14 of the Constitution.

In the case of Sukdev Singh & Ors. v. Bhagatram Sardar Singh
Raghuvanshi & Anr. (supra), Mathew, J. pointed out that:

D "The governing power wherever located must be sub-
ject to the fundamental constitutional limitations."

This has been referred to and relied upon in Central Inland Water
Transport Corporation Ltd. and Anr. v. Brojo Nath Ganguly and Anr.
(supra) and a similar Rule 9(i) was termed as "Henry VIII clause" as it
E confers arbitrary and absolute power upon the Corporation to ter-
minate the service of a permanent employee by simply issuing a notice
or pay in lieu thereof without recording any reason in the order and
without giving any opportunity of hearting to the employee. Thus, the
Rule 9(i) of the Services Discipline and Appeal Rules, 1979 was held
void under Section 23 of the Indian Contract Act, 1872, as being
F opposed to public policy and is also ultra vires of Article 14 of the
Constitution to the extent that it confers upon the Corporation the
right to terminate the employment of a permanent employee by giving
him three months' notice in writing or by paying him the equivalent of
three months' basic pay and dearness allowance in lieu of such notice.

G Regulation 9(b) of the impugned Regulation framed under the
Delhi Transport Corporation Act which is in pare materia with the said
Rul.,.9(i) is void under Section 23 of the Contract Act as being opposed
to public policy and is also ultra vires of Article 14 of the Constitution.

Another crucial question is to consider how far the impugned
H provisions of Regulation 9(b) framed under the Delhi Road Transport
D.T.C. v. D.T.C. MAZDOOR CONGRESS [RAY, J.l 267

Act can be read down in order to save it from unconstitutionality.
A
Several decisions have been cited· at the bar in order to impress upon
the Court that the impugned provisions have been made for public
purposes and for public interest and as such it should be read down in a
manner that will save the said provisions from the on-slaught of con-
stitutional invalidity ..
B
In the case of Commissioner of Sales Tax, Madhya Pradesh,
Indore and Ors. v. Radhakrishnan and Ors., [1979] 2 SCC 249 it has
I been held by this Court that for sustaining the presumption of constitu-
tionality, the court may take into consideration matters of common
knowledge, matters of common report, the histc;iry of the times and
may assume every state of facts whcih can be conceived and can even C
read down this section.

It is convenient to mention here the meaning and scope of the
word 'reading down' and 'Severance' dealt with on page 7, para B in
Australian Federal Constitutional Law by Colin Howard which reads
as follows: D

"The High Court presumes the validity of legislation to the
extent that it will not of its own motion raise questions of

- constitutionality. Legislation is treated as valid unless the
parties to litigation challenge it on constitutional grounds.
The techniques of construction known as reading down and
severance are corollaries ofthis presumption.
E

Reading down puts into operation the principle that
so far as it is reasonably possible to do so, legislation should
be construed as being within power. It has the practical
effect that where an Act is expressed in language of a F
generality which makes it capable, if read literally, of
applying to matters beyond the relevant legislative power,
the court will construe it in a more limited sense so as to
keep it within power.

xx xx xx G
xx xx xx

It does not necessarily follow that because a statute cannot
be read down it is wholly invalid. The presumption of vali-
dity leads naturally to the view that where a statute cannot
be held wholly valid it should be held valid at least to the H
268 SUPREME COURT REPORTS I 1990] Supp. I S.C.R.

extent that it is reasonably possible or practicable to do so.
A Where reading down is not available the court next decides
where there is a case for severing the invalid parts of the
statute from the parts which, standing alone, are valid. If
this can be done the court declares only the invalid parts to
be beyond power and leaves the remainder operative.
B
In Re The Hindu Women's Rights to Property Act, 1937, and The
Hindu Women's Rights to Property (Amendment) Act, 1938 and in Rea
Special Reference under Section 213 of the Government of India Act,
1935, [1941] FCR 12 the question arose whether the Hindu Women's
I
Rights to Property Act, 1937 (Central Act XVIII of 1937) and the
Hindu Women's Rights to Property (Amendment) Act, 1938 (Central
c Act XI of 1938), are applicable to agricultural land and what was the
meaning of the word 'property'. It was observed that:

"When a Legislature with limited and restricted powers
makes use in an Act of a word of such wide and general
D import as "property", the presumption must 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
word "property" in the Hindu Women's Right to Property
Act must accordingly be construed as referring to property
other than agricultural land. ...
E
There is a general presumption that a Legisl_ature
does not intend to exceed its jurisdiction."

In the case of R.M.D. Chamarbaugwal/a v. The Union of India,
[ 1957] SCR 930 the petitioners who had been promoting and conduct-
F ing prize competitions in the different States of India, challenged the
constitutionality of ss. 4 and 5 of the Prize Competitions Act (42 of
1955) and rr. 11 and 12 framed under s. 20 of the Act on the grounds
that prize competition as defined in s. 2( d) of the Act included not
merely competitions that were of a gambling nature but also those in
which success depended to a substantial degree on skill and the
G sections and the rules violated their fundamental right to carry on
business, and were unsupportable under Act. 19(6) of the Constitu-
tion, that they constituted a single inseverable enactment and, conse-
quently, must fail entirely. It was held that validity of the restrictions
imposed by ss. 4 and 5 and rr 11 and 12 of the Act as regards gambling
competitions was no longer open to challenge under Art. 19(6) of the
H Constitution in view of the decision of this Court that gambling did not

•
D.T.C. v. D.T.C. ~iA:ZNlOR CONGRESS [RAY, J.] 269

·fall within ihepurview of Art. 19( J)(g) of the Constitiltioii. A
It has been further observed iliat:

"When a question arises as to the interpretaiion to be ptii
on an enactment, what the Coud has to db is io ascertain
"the intent of.them that make it" and ihat must of course,
be gathered from the words acltially llsed in the siaitite .
. . . . . . . . . . . . To arrive at the real meaning; it is aiways
necessary io get an exact conception of the aim, scope arid
object of the whole Act .......... To decide ihe true
scope of ihe present Act, therefore, we must have regard to
all such factors as can legitimately be taken into accotini it1
ascertaining the intention of the legislattite, such as ihe
history of the legislatiot1 and the purposes iheteof, the mis-
chief which it intended to suppress and the other provisions
of the statute, and construe the language of s. 2( d) in the
light of the indications furnished by them."
D
Having regard to the circumstances, it was held that the law
which the State Legislatures moved Parliament to enact unciet Art.

-
252( 1) was one to control and regulate prize competitions of a gambl-
ing character and as such it was held that the Act was valid. It has been
further observed that where the legislation falls in part within the area
allotted to it and in part outside it, it is undoubtedly void as to the E
latter.

In the case of R·.L Arora v. State of Uttar Pradesh and Ors.,
[ 1964] 6 SCR 784 challenge was thrown to the constitutionaiiiy of the
amendments made to Ss. 40, 41 and s. 7 by the Land Acquisition
Amendment Act (Act 31of1962) on the ground that it contravened j:;
Art. 31(2) inasmuch as it makes acquisition for a co.mpany hefote
July 20, 1962 as being for a public purpose even tho·ugh it may not he
so in fact. Se'ction 7 was also challenged oil the ground that it con-
travenes· Art. 14 inasmlich as it makes· an Unreasonable discrirriinatiori
in the mailer of acquisition ·for a company before July 20, 1962 and
after that date insofar as the former acquisitions are validated 011 the G
basis of their being deemed to be for a public purpose while the latier
acquisitions are not so deemed and have to satisfy the test of public
purpose.

It has/ been held that if the lairguage of a provision of Jaw is
capabie of oiily one construction and if atcotdiiig to' ihat consfriidiori H
270 SUPREME COURT REPORTS [1990) Supp. 1 S.C.R.

the provision contravenes a constitutional provision it must be struck
A
down. A literal interpretation is not always the only interpretation of a
provision in a statute and the court has to look at the setting in which
the words are used and the circumstances in which the law came to be
passed to decide whether there is something implicit behind the words
actually used which would control the literal meaning of the words
B used. It has been further held following the observations in The
Mysore State Electricity Board v. Bangalore Woollen, Cotton and Silk
Mills Ltd. & Ors., [1963) Supp. 2 SCR 127 that it is well settled that if
certain provisions of law construed in one way will be consistent with
the Constitution and if another interpretation would render them
unconstitutional the court would bear in favour of the former con-
struction.
c
In the case of Jagdish Pandey v. The Chancellor University of
Bihar & Anr., [1968) l SCR 231 the challenge was to the constitution-
ality of s. 4 of Bihar State Universities (University of Bihar, Bhagalpur
and Ranchi) (Amendment) Act 13 of 1962 as discriminatory and viola-
D tive of Art. 14 of the Constitution. It has been urged thats. 4 confers
uncanalised powers on the Chancellor without indicating any criterion
on the basis of which the power under s. 4 can be exercised. It has been

-
observed that:

" ...... There is no doubt that if one reads s. 4 literally it
E does appear to give uncanalised powers to the Chancellor
to do what he likes on the recommendations of the Com-
mission with respect to teachers covered by it. We do not
however think that the Legislature intended to give such an
arbitrary power to the Chancellor. We are of opinion that
s. 4 must be read down and if we read it down there is no
F reason to hold that the legislature was conferring a naked
arbitrary power on the Chancellor."

Seervai in his book 'Constitutional Law of India', Third Edition
has stated at p. 119 that: ·

G " .... the Court are guided by the following rules in dis-
charging their solemn duty to declare laws passed by a
legislature unconstitutional:

(I) There is a presumption in favour of constitutionality
and a law will not be declared unconstitutional unless the
H case is so clear as to be free from doubt; "to doubt the
D.T.C. v. D.T.c: MAZDOOR CONGRESS !RAY, J.] 271

constitutionality of a law is to resolve it in favour of its A
validity."

(6) A Statute cannot be declared unconstitutional merely B
because in the opinion of the Court it violates one or more
of the principles of liberty, or the spirit of the Constitution,
unless such principles and that spirit are found in the terms
of the Constitution."

On a proper consideration of the cases cited hereinbefore as well
as the observations of Seervai in his book 'Constitutional Law of India'
c
and also the meaning that has been given in the Australian Federal
Constitutional Law by Coln Howard, it is clear and apparent that
where any term has been used in the Act which per se seems to be
without jurisdiction but can be read down in order to make it constitu-
tionally valid by separating and excluding the part which is invalid or D
by interpretting the word in such a fashion in order to make it constitu-
tionally valid and within jurisdiction of the legislature which passed the
said enactment by reading down the provisions of the Act. This; how-
ever, does not under any cicumstances mean that where the plain and
• literal meaning that follows from a bare reading of the provisions of
the Act, Rule or Regulation that it confers arbitrary; uncancalised, E
unbridled, unrestricted power to terminate the services of a permanent
employee without recording any reasons for the same and without
adhering to the principles of natural justice and equality before the
law as envisaged in Article 14 of the Constitution, cannot be reaa
down to save the said provision from constitutional invalidity by bring-
ing or adding words in the said legislation such as saying that it implies F
that reasons for· the order of termination have to be recorded. In
interpreting the provisions of an Act, it is not permissible where the
plain language of the provision gives a clear and unambiguous meaning
can be interpreted by reading down and presuming certain expres-
sions in order to save it from constitutional invalidity. fherefOre, on a
consideration of the above decisions, it is impossible to hold by read- G
ing down the impugned provisions of Regulation 9(b) framed under
s. 53 of the Delhi Road Transport Act, 1950 read with Delhi Road Trans-
port (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 H
272 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

envisaged in Article 14 of the Constitution of India. I am, therefore,
A
constrained to uphold the judgment of the Delhi High Court in
C. W.P. No. 1422 of 1985 and dismiss Civil Appeal No. 2876 of 1986. I
allow Civil Appeal No. 1115 of 1976 and agree with the order proposed
to be passed thereon by the learned Chief Justice. The other appeals as
referred to in detail in the judgment of the learned Chief Justice be
B placed before the Division Bench of this Court to be disposed of in
accordance with the observations made herein. I agree with conclusion
arrived of by my learned brother K. Ramaswamy, J.

SHARMA, .I. I have gone through the judgments prepared by
the learned Chief Just.ice and by my other learned Brothers. In view ot
the elaborate consideration by them of the questions raised by the
c parties, from both points of view. I proceed to indicate my conclusions
without further discussion.

I agree with the learned Chief Justice that the rights of the
parties in the present cases cannot be governed by the general princi-
D pie of master and servant, and the management cannot have unre-
stricted and unqualified power of terminating the services of the emp-
loyees~In the interest of efficiency of the public bodies, however, they
should have the authority to terminate the employment of undesir-
able, inefficient, corrupt. indolent and disobedient employees. but it
•
must be exercised fairly, objectively and independently; and the occa-
E sion 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 credihility. And this. in
my view, is possible only when the Jaw lays down detailed guidelines in
unambiguous and precise terms so as to avoid the danger of mis-
F interpretation 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. Examining in this background, I
am of the view that Regulation 9(b) of the Delhi Road 'fransport
Authority (Condition of Appointment and Service) Regulation, 1952
cannot be upheld for lack of adequate and appropriate guidelines. For
G these reasons Civil Appeal No. 2876 of 1986 is dismissed.

I also agree that the Civil Appeal No. 1115/76 should be allowed
in the terms indicated in the judgment of the learned Chief Justice.
The other cases shall be placed before a division bench for final
disposal.
H
D.T.C. v. D.T.C. MAZDOOR CONGRESS [SAWANT, J.l 273

SA WANT, ,J. I had the advantage of reading the judgments of
the learned Chief Justice and B.C. Ray and K. Ramaswamy, JJ. While A
with respeet I agree with the conclusion of the learned Chief Justice in
Civil Appeal No. 1115/76, with utmost respect to him, I am unable to
share his view of law on the subject in Civil Appeal No. 2876/86. I am
in respectful agreement with the view on the point expressed by Ray
and R~maswamy, JJ. in the said Civil Appeal. I give my separate B
reasons for the same.

The only question involved in all these matters is whether the
absolute power given to the Management of the public undertakings
under their respective rules/regulations to terminate the services of an
employee without assigning any reason, is constitutionally valid.
c
2. It is not necessary to refer to the facts and service rules in each
case. It will be sufficient if I reproduce hereinbelow the relevant
service regulation of one of the public undertakings, viz., Delhi Trans-
port Corporation ('DTC' for short) the validity of which is in question
in the present case. The said regulation being Regulation 9(b) of the D
Delhi Road Transport Authority (Conditions of Appointment &
Service) Regulations, 1952 (hereinafter referred to as the "Regula-
tions") reads as follows:

"9. Termination of service: (a) Except as otherwise
specified in the ;:ippointment orqers, the, services of an E
employee of the Authority may be terminated ;yithout any
notice or pay in lieu of notice:

(i) Dµrin.g the perio~ qf µrobation and without
assigning any reasons thereo(
F
(ii) For misconduct,

Oii) On the con1pletion of specjfic p~riod of ap-
pointment,

(iv) In the case of employees engaged on contract for q
a specific period, on the expiration of such period in.
accordance with the terrns of appointment.

(b) Where the termination is made due to reduction
of establishment or in circumstances other than those
rnen.tioned at (a) apoye, one mqn(IJ's noti~~ pr;;~;,· i~ lieH H
274 SUPREME COURT REPORTS I 1990] Supp. 1 S.C.R ..

thereof will be given to all categories of employees.
A
(c) Where a regular/temporary employee wishes to
resign from his post under the Authority he shall given
three/one month's notice in writing or pay in lieu thereof to
the Authority provided that in special cases, the General
B Manager may relax, at his discretion, the condition regard-
ing the period of notice of resignation or pay in lieu
thereof."

It will be obvious from the provisions of clause (b) the above that
it applies not only in the case of retrenchment of employees on account
of reduction in the establishment but also in circumstances other than
c those mentioned in clause (a). The circumstances mentioned in clause
(a) are (i) probationary period, (ii) misconduct, (iii) completion of
specific period of appointment and (iv) expiration of contractual
period of appointment when the appointment is contractual. In other
words, when the management decides to terminate the services of an
D employee but not for his misconduct or during his probation or
because his tenure of appointment, contractual or otherwise, has come
to an end, it is free to do so without assigning any reason and by merely
giving either a notice of the specific period or pay in lieu of such
notice. Reduced to simple non-technical language, clause (b) contains
the much hated and abused rule of hire and fire raminiscent of the days
E of laissez faire and unrestrained freedom of contract. There is no dis-
pute that although the language differs, the substance of the relevant
rules of the other public undertakings which are before us, is the same
and hence what applies to Regulation 9(b) of the Regulations will
apply equally to the relevant rules of the other undertakings as well.

F 3. The contentions advanced before us on behalf of the manage-
ments of the undertakings acknowledge at the very outset that such a
service rule without anything further was not only ultra vires the Con-
stitution but was indefensible in law even otherwise being opposed to
the principles of natural justice vesting as it does the naked arbitrary
power in the management. The contention , however, was that the rule
G had to be read down to imply that the power vested by it could be
exercised only in cer~ain circumstances and for valid reasons and not
otherwise. It was further contended that the rigour of the rule is
mitigated because the power granted by it is exercised by a high rank-
ing officer. It was also urged that the exercise of the said power can be
controlled by holding that it is open to scrutiny by the court, in indi-
H vidual cases. In other words, the contention was that the rule by itself
D.T.C. v. D.T.C. MAZDOOR CONGRESS {SAWANT, J.J 275

is innocent and legal and its movements are properly controlled being
A
under elderly care. Its occasional wayward behaviour in unguarded
moments can be corrected by chastisement by the courts. But the rule,
it was solemnly urged, was necessary since otherwise the management
of the undertakings will be well-high impossible. The controversy
before us thus lies in a narrow comriass, viz., whether the rule .what-
ever its admitted demerits, should continue to blot the statute book B
because it is necessary and will be used in certain circumstances only
and its use in any other circumstances can be checked by the Court.

4. It can at once be discerned thaL at the bottom of all the
lengthy ardent arguments lies an anxiety not to specify the circum-
stances under which the power given by the rule will be exercised on
. the spacious plea that such circumstances cannot be stated in advance c
ancj in the interests of the administration of the undertakings it is best
that they are µot so stated. For once I thought that the framers of our
Constitution llad f:ommitted an irretrievable mistake by ignoring the
interests of the Union and the State Governments and enumerating
such circumstances in the second proviso to Article 3l1(2) of the, Con- D
stitution. But then I was mistaken. The interests of the pu)Jlic under-
takings appear to be..JOore important than those of the Governments.
May be they are super-Governments, By claimi11g the privilege not to
enumerate even the broad guidelines as co11\ain<;d in 'Article 311(2),
the managements of the undertakings are indeed wearing a super-
crown. The posture adopted by them is all the more obdurate and E
untenable in law when they ask the court to read down the rule, and
reag il) jt circumstances under which the power can be used, but main-
tain thi!t they wil) imf!.er no circumstances mend it nor should they be
asked to do ii, by incorporating in it those very circumstances.

S. With this prglogue to the controversy, I may now examine the F
contentions ac!va11ced !J~fore us. It is contended that it is necessary to
retain the rule in its present ambiguous form because it is not possible
to envisage in advance all th~ 1.::ircurnstances which may arise neces-
sitating its use. When we asked the learned counsel for the manage-
ments whether there were any circumstances which would not be
governed by the broad guidelines given in the second proviso to sub- G
clause (2) of Article 311 of the Constitution, and why at least such
intelligible guidelines should not be incorporated in the rule, we
received no reply. We could appreciate the embarrassment of the
counsel, and as stated earlier, there lies the nub of the matter. What
this Court in. the various decisions has struck down is a similar rule in
its present naked form without any guideline whatsoever, broad or H
276 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

otherwise; It was never the argument on behalf of the employees nor
A
indeed is it to-day before us that all the possible circumstances in
which the rule may be used should be enumerated in it . .Their argu·
ment has been that at least the broad circumstances under which its
exercise may become necessary should be incorporated to avoid an
atb_itrary use or rather the abuse of power, and to guarantee the1security
of employment. that argument has been accepted by this Court in the
past by holding thai such a rule is violative of the Constitution and was
not necessary to safeguard the interests of the undertakings or the
interests of the public. the decisions which appear to take an inconsis-
tent view show on cfos_e analysis that either they were not dealing with
the validity of the rule or were rendered when the dimensions of both
Articles 14 and 21 were not expanded as they have been subsequently.
c
6. In the year 1990, it is not necessary for me to discuss in detail
the authorities which have widened the horizons of Article 14 of the
Constitution. Some of these precedents are directly on the point in as
much as the validity of similar service rules was considered there. It is
D enough if l summarise the position of law as it obtains to-day.

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 impro'
per and undesirable to expose the precious rights like the rights of life,
liberty and property to the Vagaries of the individual whims and
fancies. lt is trite to say that individuals are not and do not become
wise because they occupy high seats of power, and good sense;
circumspection and fairness does not go with the posts, hOwever high
they may be. 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 of law, it would be 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 of law.

The employment under the public undertakings is a public em(l"
loyment 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 effieiency. to ensure
both, the service conditions of those who work for them must be
encouraging, certain and secured; and not vague and whimsical. With
H capricious service conditions; both discipline and devotion are endan-
o.r.c·. v. D.T.C. MAZDOOR CONGRESS [SAWANT, J.I 211
gered, and efficlency is impaired.
A
The right tel life includes right to livelihOod. The right to live-
lihood therefore cannot hang on to the fancies of individuals ill autho-
rity. The employment is not a bounty from them nor can its survival be
at their mercy. Income is the foundation of many fundamental rights
and when work is the sole source of income, the right to work becomes
as much fundamental. Fundamental rights can ill-afford to be con-
signed to the limbo of undefined premises and uncertain appllcations.
That will be a mockery of them.

Both the society and the individual employees, therefore; have
an ar{xious interest in service conditions being well-defined and
explicit to the extent possible. 'The arbitrary rules, such as the one c
under. discussioil', which are also sometimes' described as Henry VIII
Rules, can have no place in any service conditions. .. . .

These are the conclusions which flow from Sukhdev Singh & Ors.
v. Bhagatram Sardar Singh Raghuvanshi & Anr., [1975) 3 SCR 619; D
Maneka Gandhi v. Union of India, [1978) 2 SCR 621; The Manager,
Government Branch Press & Anr. v. D.B. Felliappa, (1979) i SCC477;
Managing Director, Uttar Pradesh Warehousing Corporation & Anr. v.
Vinily Narayan Vajpayee, [1980) 2 SCR 773; A.L. Kalra v. The.Project
& Equipment Corporation of India Limited, [1984) 3 SCR 646;.Work-
men of Hindustan Steel Ltd. & Anr. v. Hindustan Steel Ltd. & Ors., E
[ 1~85] 2 SCR 428; West Bengal State Electricity Board & Ors. v. Desh
Bandhu Ghosh & Ors., [1985] 2 SCR 1014; Olga Tellis & Ors. v.
Bombay Municipal Corporation & Ors. etc, [1985] Supp. 2·scR 51;
-·. Union of India & Anr. v. Tulsiram Patel & Ors., (1985] Supp. 2 SCR
131; Central Inland Water Transport Corporation Ltd. & Anr. v.·Brojo
Nath Ganguly & Anr. etc., [1986) 3 SCR 156; O.P. Bhandlitiv. Indian F
Tourism Development Corporation Ltd. & Ors., [1986] 4 SCC 337;
N. C. Dalwadi v. State of Gujarat, [1987] 3 SCC 611; M.K. Agarwal v.
Gurgaon Gramin Bank & Ors., [1987) Supp. SCC 643 and Daily/Rated
Casual Labour employed under P & T Depattwent through Bhartiya
Da.k Tar Mazdoor Manch etc. v. Union of India & Ors., [1988] 1 SCC
~ G
7 .. Since, before us the rule in question which admittedly did not
lay down explicit guidelines for its use was sought to be defended only
on two grounds, viz., that the power_conferred by it is to be exercised
only by'high authorities anclthat .it is capable of being read down to
imply ciFcumstances under which alone it can be used, I need deal only H
with the said grounds.
278 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

A 8. The "high authority" theory so-called has already been
adverted to earlier. Beyond the self-deluding and self-asserting righte-
ous presumption, there is nothing to support it. This theory undoub-
tedly 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. Even while Shah, J. in his dissenting
B
opinion in Moti Ram Deka etc. v. General Manager, N.E.P. Railways,
Maligaon, Pandu, etc., [1964] 5 SCR 683 had given vent to it, Das
Gupta, J. in his concurring judgment but dealing with the same point
of unguided provisions of Rule 148(3) of the Railway Establishment
Code, had not supported that view and had struck down the rule as
being violative of Article 14 of the Constitution. The majority did not
c deal with this point at all and struck down the Rule as being void on
account of the discrimination it introduced between railway servants.
and other government servants. ·

The reliance placed on the decision in Shri R~m Kr~(lrzp Dalmia
v. Shri Justice S.R. Tendo.lkar & Ors., [1959] SCR 279 to support the
D
above theory is also according to me not correct. As has been pointed
out there, the Commission of Inquiry Act, 1952, the validity of which
was challenged on the ground of unguided powers to institute ingui-
ries, was not violative of Article 14 because the long title and Section 3
of the Act had contained sufficient guidelines for exercise of the
power. Section 3 has stated that the appropriate government can
E appoint a Commission of Inquiry only for the purpose of making
inquiry into any definite matter of public importance. It is in the
context of this guideline in the Act, that it is further stated there that
even that power is to be exercised by the government and not any petty
official. Hence a bare possibility that the power may be abused cannot ~.

per se invalidate the Act itself. The proposition of law stated there is to
F be read as a whole and not in its truncated form. The auth()fity doe~
not lay down the proposition that even in the absence of guidelines,
the conferment of power is valid merely because the power is to be
exercised by a high official. It must further be remembered that in this
case, the contention was that although the appropriate government
was given power to appoint Commission of Inquiry into any pefinite
G matter of public importance, the delegation of power was excessive
since it was left to the government to decide for itself in each case what
constituted such matter. The court repelled the argument by pointing
out that "definite matter of public importance" constituted sufficient
guideline to the government. It was not, therefore, a case of no
guideline but of the absence of details of the guideline.
H
D.T.C. v. D.T.C. MAZDOOR CONGRESS [SAWANT, J.] 279

Of similar nature is the reliance placed on the decision in The
A
Collector of Customs; Madras .v. Nathella Sampathu Chetty & Anr.,
[ 1962] 3 SCR 786 for the proposition that the possibility of the abuse of
the powers is no ground for declaring the provision to be unreasonable
or void, The relevant observations are made while repelling the con-
tention there that the burden thrown under provisions of Section 178A
of the Sea Customs Act, 1878 on the possessor of the goods to show that B
they were not smuggled was violative of Article 19(1)(f) and (g) of the
Constitution. The observations are as foiiows:

"The possibility of abuse of a statute otherwise valid does
not impart to it any element of invalidity. The converse
must also follow that a statute which is otherWise invalid as
being unreasonable cannot be saved by its being adminis- c
tered in a reasonable manner. The constitutional validity df
the statute would have to be determined on the basis of its
provisions and on the ambit of its operation as reasonably
construed. If so judged it passes the test of reas9nablcness,
possibility of the powers conferred being improperly used b
is no ground for pronouncing the law itself invalid and
similarly if the law properly interpreted and tested in the
light of the requirements set out in Part Ill of the Constitu-
tion does not pass the test it cannot be pronounced vaiid
merely because it is administered in a manner which miglit
not conflict with the constitutional requirements. In saying
this we are not to be _understood as laying down that al Jaw
which might operate harshly but still be constitutionally
valid should be operated always with harshness or that
reasonableness and justness ought not to guide the actual
·administration of such laws."
F
The statute there was saved by the provisions of Article 19(6) of the
Constitution and was otherwise valid. It was not a case of a provision
which was· constitutionally invalid being saved by recourse to the spa-
cious assumption of its reasonable exercise in iri'dividual cases.

In Tata Oil Mills Co. Ltd. v. Workmen & Anr., [1964] 2 SCR G
125, it was a case of an employee of a private company who was given a
discharge simpliciter. This Court following its earlier decisions on the
point observed that in several cases, contract of employment or Stand-
ing Orders authorise an industrial employer to terminate· the
employee's service by giving one month's notice or salary of one_
month in lieu of notice and normally an employer may, in a proper H
280 SUPREME COURT REPORTS

case be entitled to exercise the power. But where such order gives rise
to an indl!strial dispute, the form of the ord¢r would not be decisive
and the ind11strial adjudicator WO!iid be entitled to probe it to find out
whether it is ma/a fide or is made in colourab)e exercise of the power.
Being a private employment, the power so conferred was not assailed
on the grol!nd that i! violated Article 14 of the Constitution. I fail to
understan\I the reliance p!acec:l on this authority to support the appel-
lants' cas~before us.

9. Tlie other authorities relied o0 behalf of the appellants have
similarly no relevance to the point. In Jyoti Pershad v. The Adtriinis-
trator for the Union Territory of Delhi, [1962) 2 SCR 125, the .Slum
Clearance Act which was cl!allengec:l there contained enough guide-
c lines for the exercise of the power: In Mµnicipal Corporation of Grea-
I
ter Bombay v. P.S. Malvenkar & Ors., [1978) 3 SCR 1000, Order 26 of
t!ie Standing Orders anc:l Servi\:C Regulations which was in question
there required reason·s to be given.for effecting termination simpliciter
of an employee. In Organo Chemical Industries & Anr. v. Union of
D India & Ors., [1980] 1SCR61, Section 143 of the Provident Fund Act
Which was challenged was held to be valid since the Act contained
enough guidelines for imposing penal damages. In Champak/al
Chimanlal Shah v. The Union of India, {1964] 5 SCR 190, Rule 5 of
\he Central Civil Services (Temporary Services) Rules, 1949 was chal-
lenged on the ground that it discriminated between temporary and
E permanent employees. There was no challenge to the absolute power
given by the said rule to terminate the services of temporary
employees. In Ram Gopal Chaturvedi v. State of Madhya Pradesh,
[ 1970] 1 SCR, 472, it was a case of termination of a temporary Govem-
me11t serva11t's services. I11 Air India Corporation, Bombay v. V.A.
Rebel/ow & Anr., [1972] 3 SCR 606, the challenge was to the termina-
·tion of services on the ground tl!at it was done in colouriible exercise of
power under Regulation 48 of the Air India Employees' Service Regu-
lations. 'l;'he said regulation was not challenged on the ground that it
·gave unchanne1ised and unguided power of terminating the services of
employees. In Hira Nath Mishra & Ors. v. The Principal, Rajendra
Medical College, Ranchi and Anr., [1973] 1 SCC 805,it was the case of
" G the expulsior pf students from college for two aeademic sessions
pursuant to the order passed by the Principal of that college. The
expulsion was effected following a confidential complaint received
from 36 girl students residing in the girls' h9stels alleging that the
students in q11estion had entered the compound of the_girls' hostels at
belated night anc:l wall~ed without clothes on them. The students were
lie~rd but the evidence of the girls was not recorded in their presence.
P.T.C. v. D.T.C. MAZDOOR CONGR~SS (SAWANT, J.l

• The Court held that under the circumstances the requirements of
natural justice were fulfilled since the principles of natl!ral justice wern A/
not inflexible and differed in different circumstauces. I tiave n()t bee!\·
able to appreciate the relevance of this decision to the p()int iQ iss1Je.

10. I may now deal with the second contention vehemently
urged on behalf of the appellants. The contention was tQl\t jf it is P.
possible to save a legislation by readiug it down to read in it worcls.
expressions or provisions, it should noi be struc1' down. In 9r<:ler \o
save the present rule, it was urged on behalf of the appellants tliat the
Court should read in it circ11mstances under which a!()1te it can )Je 11sed,
What precise circumstances Should be read in._it, !iowever, was !Wt
stated by the learned counsel. I am afraid that the cloctrine of reading.
down a statute has been wrongly pressed i.nto service in the present c.·.·
case. The authorities relied up9n by tl;Jg learue<:l counsel f()r th~ appe\,
!ants not only <;lo not help the appellants l;l11t go against their ca.se. Ii
would be better if I first deal with the authorities cjted at the !Jar for
they will also bring out the correct meaning ancl app!icl!\ion Of _the Sl!i\\.
doctrine as well as its limitations. p
In Re The Hindu Women's Rights to Proper!)! Acl, 1937, @d the
Hindu Women's Rights to Property (Amendment) Act, 1938 etc. ,11941]
FCR 12 what fell for consideration was whether the saiq two Act w!iich
were the Central pieces of legislation operated t9 regula.te successi911
to agricultural land in the then Governors' ProvinCtis. Admjtte<;ily, · i;.
under the scheme of the then. Governmept of India Act, 1935, aft~r
April 1, 1937, t.he Central Legislature was precluded from dealiQg with
the subjects numerated in List II of the 7th Schedl!le so far ~s tlw
Govern()rs' Provinces were copcerued. Laws wi\b respect \o thg
"devolution of agricultural land" could be enactecl Q!llY by t!w Pr9vill'
cial Legislatures (Entry No. 21 of List II) and wills, intestacy am! p
succession, save .as regards agricultural la!ld appeared ~Entry N9. 7
of List III, i.e., the Concurrent List. Hence, it was obvious that the
said Act~ enacted as they were by the Ce11trnl Leglslature cQulq ~\)\
· have dealt with succession to agricultural land so far as \he (:lovefl!Qrs'
Provinces were concerned. It is in these circiuinstances that tlie fe@rnl
Court read the two Acts of 1937 and 1938 as being J!llt operntive tQ . g
regulate succession to agricultural land in th<0 Governo~· Provjp~s
but operative to regulate devolution by survivorship of property ()\ll!}r
than agricultural land. It will thus be obvioy,s that the limited Pl!fPos!} ·
for which the doctrine of reading down was called into play iii that cas~
was to exclude from the purview of the Act a subject wbicti was nQl
within the competence of the legislature which h~c;I enacted it" ff
"
282 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

In Nalinakhya Bysack v. Shyam Sunder Haldar & Ors., [1953]
SCR 533 the expression "decree for recovery of possession" in Section
18(1) of the West Bengal Premises Rent Control (Temporary Provi-
sions) Act (XVII of 1950) fell for consideration, and the controversy
was whether it included also an order for recovery of possession made
under Section 43 of the Presidency Small Cause Court Act, 1882 and
B hence a person against whom an order under the latter provision was
made was not entitled to claim relief under the former provision. In
that connection the Court observed as follows:

"It must always be borne in mind, as said by Lord Halsbury
in Commissioner for Special Purposes of Income Tax v.
Pemsel, LR 1891AC531 at p. 549, that it is not competent
c to any Court to proceed upon the assumption that the
Legislature has made a mistake. The Court must proceed
on the footing that the Legislature intended what it has
said. Even if there is some defect in the phraseology used
by the Legislature the Court cannot, as pointed out in
D Crawford v. Spooner, 6 Moo. PC 1; 4 MIA 179; aid the
Legislature's defective phrasing of an Act or add and
amend or, by construction, make up deficiencies which are
left in the Act. Even where there is a casus omissus, it is, as
said by Lord Russel of Killowen in Hansraj Gupta v. Offi-
cial Liquidator of Dehra Dun-Mussoorie Electric Tramway
E Co. Ltd., (1933] LR 60 IA 13; AIR 1953 PC 63 for others
than the Courts to remedy the defect. In our view it is not
right to give to the word "decree" a meaning other than its
ordinary accepted meaning and we are bound to say, in
spite of our profound respect for the opinions of .the
learned Judges who decided them, that the several cases
F relied on by the respondent were not correctly decided."

In R.M.D. Chamarbaugwal/a v. The Union of India, [1957] SCR
930, more or less a similar situation arose. The Parliament had enacted
the Prize Competitions Act to provide for the control and regulation of
the prize competitions, and Section 2 of the Act had defined "Prize
G Competitions" to mean "any competition (whether called a cross-
word priZe competition, a missing-word competition; a picture prize
competition or by any other name), in which prizes are offered for the
solution of any puzzle based upon the buildi~g up, arrangem~nt,
combination or permutation of letters, words or figures". The validity
of.the restrictions imposed by the Act was challenged as going beyond
H Article 19(6) of the Constitution. The Court took a recourse to the
D.T.C. v. .D.T.C. MAZDOOR CONGRESS iSAWANT, J.l 283

doctrine of reading down and held that the definition ofprize competi- A
tion given in Section 2(d) of the Act had in view only such competi-
tions as were of gambling nature and no others. The Court further held
- there that in interpreting an enactment ihe Court should ascertain the
intention of the legislature not merely from a literal meaning of the
words used but also from such matters as the history of the legislation;
its purpose and the mischief which it seeks to suppress. B

In Kedar Nath Singh v. Stme of Bihar, [1962] Supp. 2 SCR 769,
th·e challenge was to the constitutional validity of Section 124A of the
Indian Penal Code. Two views were before this Court with regard to
the ambit of the said section. One which held that words, deeds or
writings constituted the offence of sedition under the said section only C
when they had the intention or tendency to disturb public tranquility.
to create public disturbance or to promote disorder. The other view
wa·s that it was not an essential ingredient of the offence of sedition
under the said section that the words, deeds or writings should be
intended to or be likely to incite public disorder. The latter view of the
section would have rendered it unconstitutional. It is in these circumst- D
ances that this Court held that the former view should be taken which
would render the said section constitutional. The Court in that connec-
tion also further held that keeping in mind the reasons for the intro-
duction of the said section and the history of sedition the former view
was the correct interpretation of the ambit of the said section.
E
In R. L. Arora v. State of Uttar Pradesh & Ors., [1964] 6 SCR
784, the validity of Sections 40 and 41 of the Land Acquisition Act,
1894, and of Section 7 of the Amending Act, was similarly upheld by
placing ·an them construction which would render them constitutional.
The relevant provisions were construed to mean that where land is
acquired for the construction of a building or work which subserves the F
public purpose of the industry or work in which a company is engaged
or is about to be engaged, it can be said that the land was acquired for
a .public purpose.

In Jagdish Pandey v. The Chancellor, University of Bihar &
Anr;, I1968] · 1 SCR 231, Section 4 of the Bihar State Universities G
(University of Bihar, Bhagalpllr and Ranchi) (Amendment) Act 13 of
1962 was called in question as being violative of Article 14 of the
Constitution on the ground that the said section did not make any
provision for giving the teacher a hearing before passing the· order
thereunder. By that section, every appointment, dismissal etc. of any
teacher of a college affiliated to the University (but not belonging to H
284 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

the State) made on or after 27th November, 1961 and before !st
A
March, 1962 was to be subject to such order as the Chancellor of the ..•.,.•.
University may on the recommendation of the University Service
Commission established under Section 48 of the said Act pass with
respect thereto. The Court held that the said section was not invalid on
the ground of unchannelised power given to the Chancellor because it
B never authorised the Chancellor to scrutinise the relevant appoint-
ments for satisfying himself that they were in accordance with
University Act and its Statutes etc. The Court further held that
although the said section did not make a provision for giving the
teacher a hearing before passing order thereunder, such hearing must
·oe read in the said section which the Commission had to give ac00rding
to the principles of natural justice before making its recommendations
c to the Chancellor.

In Shri Urned v. Raj Singh & Ors., [1975) 1 SCR 918, one of the
questions which fell for consideration was whether the expression "to
withdraw or not to withdraw from being a candidate" referred to the
.'
D stage of withdrawal of candidature under Section 37 and whether it
applied to a situation where a contesting candidate announced that he
does not wish to contest the election or declared his intention to sit
down after the last date for withdrawal of candidature under Section 37
had passed. Over-mling its earlier decision in Mohd: Yunus Salim's
case -AIR 1974 SC 1218, the Court held that the function of the Court
E is to gather the intention of the legislature from the words used by it,
and it would not be right for the Court to attribute an intention to the
legislature which though not justified by the language used by it,
accords with what the Court conceives to be reason and good sense
and then bend the language of the enactment so as to carry out such
presumed intention of the legislature. For the Court to do so would be
F to overstep its limits. The Court also held that the words used by the
legislature must_be construed according to their _pl~in natural meaning,
and in order to ascertain the true intention of the legislature, the Court
must not only look at the words used by the legislature but should also
have regard to the context and the setting in which they occur. The
word "context" has to be construed in a wide sense to mean all the
.G provisions of the Act which bear upon the same subject matter and
these provisions have to be read as a whole and in their entirety each
throwing light and illumining the meaning of the other.

In Sunil Batra etc. v. Delhi Administration & Ors., [1973) 4 SCC
494 it was held that under Section 30(2) of the Prisons Act which
H provided that a prisoner under sentence of death shall be confined in a
D.T.C. v. D.T.C. MAZDOOR CONGRESS [SAWANT, J.J 285

cell apart from all other prisoners, did not mean that he has to be
confined cellularly or separately from the rest of the prisoners so as to
put him in a solitary confinement. The said expression had a restricted
meaning and it only meant that such a prisoner has to be kept in a
separate cell but one which is not away from the other cells. Thus, the
.~ said expression, viz. "shall be confined in a cell apart from all other
prisoners" in the said provision was read down to exclude solitary B
confinement.

In Excel Wear etc. v. Union of India & Ors., [1979] 1SCR1009,
one of the questions before this Court was whether the Court could
read in Section 25-0 (2) of the Industrial Disputes Act that it was
incumbent on the authority to give reasons in his order for refusing C
permission to close down the undertaking. The Court answered it in
ihe n~gative. Although in the discussion that follows explicit reasons
for the same are not found, it is legitimate to presume that the Court
did not accept the said contention because of the clear and explicit
language of the said section.
D
In Minerva Mills Ltd. & Ors. v. Union of India & Ors., [1981] l
SCR 206, the majority judgment has discussed the limitations of the
doctrine of reading down which is relevant for our purpose. In that
case, it was contended on behalf of the State that Article 31C should
be read down so as to save it from the challenge of unconstitutionality
and it was urged that it would be legitimate to read into that Article E
the intendment that only such laws would be immunised from the
challenge under Article 14 and 19 as did not damage or destroy the
basic structure of the Constitution. The Court opined that "to do so in
that case would involve a gross distortion of the principle of reading
down depriving that doctrine of its only or true rationale when words
of width are used inadvertently." According to the· Court, "the device F
of reading down is not to be resorted to in order to save the susceptibi-
•l" . lities of the law makers, nor indeed to imagine a law of one's liking to
haye been passed. One must at least take the Parliament at its word
when, especially, if undertakes a constitutional amendment ...... .
. . . . . . . . . . It'1he Parliament has manifested a clear intention to exer-
cise an unlimited power, it is impermissible to read down the amp- G
litude of that power so as to make it limited. The principle of reading
down .cannot be invoked or applied in opposition to the clear intention
of the legislature. We suppose that in the history of the constitutional
law, no constitutional amendment has ever been read down to mean
the exact opposite of '}'hilt it says and intends. In fact, to accept the
argument that we should read down Article 3 lC::, so as to make it H
286 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

conform to the ratio of the majority decision in Kesavananda Bharati,
A
is to destroy the avowed purpose of Article 3 lC as indicated by the
very heading "Saving of certain laws" under which Articles :HA, 3 lB
and 3 lC are grouped. Since the amendment to Article 3 lC was
unquestionably made with a view to empowering the legislatures to
pass laws of a particular description even if those laws violate the
B discipline of Articles 14 and 19, it seems to us impossible to hold that
we should still save Article 31C from the challenge of unconstitutiona-
lity by reading into that Article words which destroy the rationale of
that Article and an intendment which is plainly contrary to its pro-
claimed purpose."

c tionalThe Court then dealt with the argument of the learned Addi-
Solicitor General who contended that it was still open to the
Court under Article 3 lC of the Constitution to decide whether the law
enacted pursuant to it secured any of the Directive Principles of the
State Policy and whether the object of the Directive Princip~s could
not be secured without encroaching upon the Fundamental Rights and
D the extent to which encroachment was necessary and whether such
encroachment violated the basic structure of the Constitution. The
Court opined that this argument was open to the same criticism to
which the argument of Attorney General was open and that "it would
be sheer adventurism of a most extraordinary nature to undertake the
kind of judicial enquiry which according to the learned Additional
E Solicitor General, the courts are free to undertake." The Court further
held that in the very nature of things it was difficult for a court to
determine whether a particular law gave effect to a particular policy
and whether a law was adequate enough to give effect to that policy. It
was pointed out by the Courtthat it was not possible for the Court to
set aside the law so enacted as invalid merely because in the opinion of
F' the Court, the law was not adequate enough to give effect to that
policy. The Court further pointed out that "the only question open to
judicial revie'w was whether there was a direct and reasonable nexus
between the impugned law and the provisions of the Directive Princi-
ples. The reasonableness was to be examined with regard to such
nexus and not with regard to the impugned law. Hence, it was not ••
G open to the Court to undertake the kind of enquiry suggested by the
Additional Solicitor General. That would involve an extensive judicial
review which was impermissible in law." The Court then pointed out
that where the express words of the statute are clear and intended to
give power without limitation, the statute cannot be saved by reading
into them words and intendment of a diametrically opposite meaning
H and content. The Court opined that provisions such as these provide a
D.T.C. v. D.T.C. MAZDOOR CONGRESS [SAWANT, J.J 287

striking illustration of the limitations of the doctrine ofreading down.
A
In Union of India & Anr. etc. v. Tttlsiram Patel etc., [198513 SCC
398 the majority judgment asserts that when the statute expressly
excludes the rule ofaudi.alteram partem, there is no scope for reintro-
ducing it by a side-door to provide the enquiry which h_as been expres-
sly prohibited. B

In Elliott Ashton Welsh, 11 v. United Statesr398 US 333; 26 L. ed.
2nd· 308 while making useful observations on the doctrine of reading
down and <if recasting the statute, in his concurring opinion Harlan, J.
stated as follows:

"When the plain thrust of a legislative enactment can
c
only be circumvented by distortion to avert an inevitable
constitutional collision, it is only by exalting form over sub-
stance that one can justify this veering off the path that has
been plainly marked by the statute. Such a course betrays
extreme skepticism as to constitutionality, and, in this D
instance, reflects a groping to preserve the conscientious
objector exemption at all cost.

I cannot subscribe to a wholly emasculated construc-
tion of a statute to avoid facing a latent constitutional ques-
tion, in purported fidelity to the salutary doctrine of avoid- E
ing unnecessary resolution of constitutional issues, a princi~
pie to which I fully adhere. It is, of course, desirable to
salvage by construction legislative enactments whenever
there is good reason to believe that Congress did not intend
to legislate consequences that are unconstitutional, but it is
not permissible, in my judgment, to take a lateral step that F
robs legislation of all meaning in order to avert the collision
between its plainly intended purpose and the commands of
the Constitution. ·

It must be remembered that although this Court will
often strain to construe legislation so as to save it against G
constitutional attack, it must not and will not carry this to
the point of perverting the purpose of a statute . . . or
judicially rewriting it. To put the matter another way, this
Court will not consider the abstract question of whether
Congress might have enacted a valid statute but instead
must ask whether the statute that Congress did enact will H
288 SUPREME COURT REPORTS [1990) Supp. 1 S.C.R.

permissibly bear a construction rendering it free from con•
A
stitutional defects.

The issue comes sharply into focus in Mr. Justice
Cardozo's statement for the Court in Moore Ice Cream Cv.
v. Rose, 289 US 373, 379; 77 Led. 1245, 1270:
B
" 'A statute must be construed, if fairly possible, so
as to avoid not only the conclusion that it is uncon-
stitutional, but also grave doubts upon that score.'
... But avoidance of a difficulty will not be pressed to
the point of disingenuous evasion. Here the i111ent1011
of the Congress is revealed too distinctly to permit us
c to ignore it because of mere misgivings as to power.
The problem must be faced and answered."

If an important congressional policy is to be perpe-·
tuated by recasting unconstitutional legislation, as the pre-
D vailing opinion has done here, the analytically sound
approach is to accept responsibility for this decision. Its
justification cannot be by resort to legislative intent, as that
term is usually employed, but by a different kind of legisla-
tive intent, namely the presumed grant of power to the
courts to decide, whether it more nearly accords with Con-
E gress' wishes to eliminate its policy altogether or extend it
in order to render what Congress plainly did intend,
constitutional."

11. It is thus clear that the doctrine of reading down or of recast-
ing the statute can be applied in limited situations. It is essentially
F used, firstly, for saving a statute from being strU'ck down on account of
its unconstitutionality. It is an extention of the principle that when two
interpretations are possible-one rendering it constitutional and the
other making it unconstitutional, the former should be preferred. The
unconstitutionality may spring from either the incompetence of the
legislature to enact the statute or from its violation· of any of the
G provisions of the Constitution. The second situation which summons
its aid is where the provisions of the statute are vague and ambiguous
and it is possible to gather the intentions of the legislature from the
object of the statute, the context in which the provision occurs and the
purpose for which it is made. However, when the provision is cast in a
definite and unambiguous language and its intention is clear, it is not
H permissible either to mend or bend it even if such recasting is in accord
D.T.C. v. D.T.C. MAZDOOR CONGRESS [SAWANT, J.] 289

with good reason and conscience. In such circumstances, it is not possi-
A
ble for the Court to remake the statute. Its only duty is to strike it
down and leave it to the legislature if it so desires, to amend it. What is
further, if the remaking of the statute by the courts is to lead to its
distortion that course is to be scrupulously avoided. One of the situa-
tions further where the doctrine can never be called into play is where
the statute requires an extensive additions and deletions. Not only it is B
no part of the court's duty to undertake such exercise, but it is beyond
its jurisdiction to do so.

12. Judged in the context of the above principles I am of the
view that the doctrine cannot be availed of for saving the present
regulation. In the first instance, the regulation is a part of the service
regulations of the employees made by .the Delhi Road Transport c
Authority in exercise of the powers conferred by sub-section (1) read
with clause (c) of sub-section (2) of Section 53 of the Delhi Road
Transport Act, 1950 (hereinafter referred to as the "Act"). The object
of the. Act is to provide for the establishment and the regulation of
Road Transport Authority for the promotion of a co-ordinated system D
of road transport in the State of Delhi. There is nothing either in the
object of the service regulations of which the present regulation is a
part or in the object of the Act which has a bearing on the said Regula-
tion 9(b). If anything, the object of the Act would require framing of
such service regulations as would ensure dedicated and diligent emp-
loyees to run the undertaking. The dedication of the employees would E
pre-suppose security of employment and not a constant hanging 6f the
Democle's sword over their head, and hence would in any case not
bear the existence of such regulation. Secondly, the language of the
regulation is so crystal clear that no two interpretations are possible to
be placed on it and hence it is not permissible to read in it any meaning
other than what is clear!¥ sought to be conveyed by it. Thirdly, the F
context of the said regulation makes it abundantly clear that it is meant
to be a naked hire and fire rule and the authority has been vested with
unguided and arbitrary power to dispense with the services of any
category of the employees. Sub,clause (a) of the said Regulation 9
mentions elaborately the circumstances in which the services of an
employee can be terminated without any notice or pay in lieu of such G
notice. Sub-clause (b) follows closely on its heel and states in .clear
language that when the termination is made due to reduction of
establishment or in circumstances other than those mentioned in sub-
clause (a), one month's notice or pay in lieu thereof is all that is
necessary to be given for terminating an employee's services. The
intention of the rule-maki11g authority, therefore, is more than clear. It H
290 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

was to give an absolute free hand without any limitations whatsoever
A to terminate the services of any employee. Both the language of the
regulation as well as the context in which it is cast leave no scope for
reading into it any further provision. What is more, the kind of recast-
ing which is suggested on behalf of the appellants would not only
distort the intention of the rule-making authority but would also
B require extensive amendment to it of a very vague nature. The appel-
lants suggest firstly that we should read into the regulation a provision
that the concerned employee would be given a hearing. The suggestion
itself begs the question: Hearing for what? Is he to be heard with ·
regard to his misconduct" If so, it will require that he should first be
intimated of the misconduct of which he is guilty. But that kind of a
situation is taken care of by sub-clause (a) of the said regulation. There
c is, therefore, no need of a separate provision for the same. If, on the
other hand, the services of an employee are to be terminated on
grounds other than those mentioned in sub-clause (a), then those
grounds being unknown to the employee, cannot be met by him even if
he is given a hearing. The reading in the rule of a mere provision of a
D hearing is, therefore, meaningless. The other suggestion made on
behalf of the appellants is still more objectionable. The suggestion was
that we should read in the rule all circumstances where it is not possi-
ble or necessary to hold an enquiry. I thought that such situations are
capable of being formulated easily and conveniently at least in general
terms as is done by the Constitution-makers in the second proviso to
E Article 311(2). In fact, one of the public undertakings viz., Indian
Airlines has come out with such regulation being amended Regulation
13 of its Employees' Service Regulations, and the same has been
placed on record by them. What is necessary to note in this connection
is that the reading of such circumstances in the existing regulation
would require its extensive recasting which is impermissible for the
F Court to do. I know of no authority which supports such wide reading
down of any provision of the statute or rule/regulation. For all these
reasons the doctrine of reading down is according to me singularly
inapplicable to the present case and the arguments in support of the
same have to be rejected.

G 13. I am, therefore, of the view that there is no substance in this
appeal. I would rather that the long departed rule rests in peace at
least now. Hence I dismiss Civil Appeal No. 2876/86 with costs.

I allow Civil Appeal No. 1115 of 1976 and agree with the order
proposed to be passed therein by the learned Chief Justice.
H
D.T.c. v. D.T.C MAZDOOR CONGRESS IK. RAMASWAMY, J.] 291

The rest of the civil appeals, and Special Leave Petition (Civil) A
No. 7612 of 1987 be referred to the Division Bench for disposal in
accord~!lce with the opinion expressed in Civil Appeal No. 2876 of
1986 hereinabove. The application for intervention are allowed.

K. RAMASWAMY. J: I. These batch cases concern, a refe-
rence. the correctness of the ratio rendered in Central Inland Water B
Transport Company Limited v. Brojonath Gangu/y, [1986] 3 SCC. 156
= AIR 1986 SC 1571 (for short Brojo Nath). The facts in C.A. No.
2886/86 lie in a short compass and sufficient for deciding the con-
troversy are stated thus:

2. Th~ Delhi Transport Corporation, a statutory body termina-
ted the services of its three permanent employees, the Conductor
c
(R. 2), Asst!. Traffic Incharge (R. 3), and the Driver (R. 4) for their
alleged inefficiency, by exercising the power of Regulation 9(b) of
Delhi Road Transport Authority (Conditions of appointment and
Services) Regulation, 1952 (for short "the Regulation") framed under
section !53 of the Delhi Road Transport Act, 1950 read with Delhi D
Transport (Amendment) Act, 1971 (for short "the Act"). The first
respondent union assailed the validity of the Regulation which the
High Cpurt of Delhi struck it down as offending Articles 14 and .16 of
the Constitution. The High Court solely relied on the ratio in Brojo
Nath whose correctness is the subject of the reference: My learned
brothter, My Lord the Chief Justice extensively stated the argument of E
the counsel on either side. Therefore, to avoid needless burden on this
j11dgment, I consider it redundant to reiterate them once over.

3. · Regulation 9(b) of the Regulations read thus: Termination of
Services.•
F
"Whether the termination is made due to reduction of establish-
ment or in circumstances other than those mentioned in (a) above, one
month's no!ice ·or pay in lieu ther~of will be given to all categories ~f
employees" as is similar to Rule 9 of the Rules in Brojo Nath's case
(supra) which this Court declared to be Henry VIII clause, conferring
an absolute, arbitrary and unguided power upon that Corporation and G
was held to be ultra vires of the provisions of the Constitution and was
void under section 23 of the Indian Contract Act. As stated earlier, the
correctness thereof is the primary question in these appeals.

4. Sri Ashok Desai, the learned Solicitor General vehemently
conten(le(I that, under ordinary law of "master and servant" the H
292 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

Corporation is empowered by the Contract of Service to terminate the
A
services of its employees in terms thereof. The declaration in Bro10
Nath 's case that such a contract is void, under section 23 of the Indi;an
Contract Act or opposed to public policy offending the Fundamental
Rights and the Directive Principles, is not sound in law. He contends
that as a master the Corporation has unbridled right to terminate the
B contract in the interests of efficient functioning of the Corporation or
to maintain discipline among its employees: The termination, if is
found to be wrongful, the only remedy available to the employees is to
claim damages for wrongful termination but not a declaration as was
granted in Brojo Nath's case. In support thereof, he cited passages
from Chitti on Contract, Halsbury's Laws of England and the ratio in
Uniun of India v. Tulsiram Patel, [1985] Supp. 2 SCR 131 =AIR
c 1985 SC. 1416. He also placed strong reliance on Industrial Law and
the decisions of this Court cited by my learned brother, the Chief
Justice. Alternatively he contended that the relevant regulations
would be read down so as to be consistent with Arts. 14 and 16(1) read
with Art. 19( l)(g) oi tbe Constitution and the authority invested with
D such power could in an appropriate case, report to terminate the
services of an employee expeditiously without recourse to an elabora-
ted enquiry and opportunity of hearing. The latter contention ofread-
i ng down the relevant rules received support from the learned
Attorney General Sri Soli J. Sorabjee and other counsel appearing for
the employers. M/s. M.K. Ramamurthi, R.K. Garg, and P.P. Rao,
E learned counsel appearing for the employees resisted these contentions.

5. The IT\ain controversy centres round the question whether the
employer, Statutory Corporation or instrumentality or other authority
under Art. 12 of the Constitution has unbridled power to terminate the
services of a permanent employee by issue of notice or pay in lieu
F thereof without inquiry or opportunity, in exercise of the power in
terms of contract which include statutory Rules or Regulations or
instructions having force of law. It is undoubted that under ordinary
law of master and servant, whether the contract of service is for a fixed
period or not, if it contains a provisions for termination of service by
notice, in terms thereof, it can be so determined and if the contract
G finds no provisions to give notice and the contract of service is not for a
fixed period, law implies giving of a reasonable notice. Where no
notice or a reasonable notice was issued, before terminating the con-
tract, the termination of the contract of service is wrongful and the
aggrieved employee is entitled at law to sue for damages. But this
common law principle could be applied to the employees, appointed
H by a Statutory Corporation or authority or an instrumentality within
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.[ 293

the meaning or Article 12 of the Constitution is the square question. It A
is not disputed that Delhi Road Transport Corporation is a Statutory
. Corporation under the Act and the Regulations are statutory and its
employees are entitled to the fundamental Rights enshrined in .Part III
of the Constitution. It is well settled law by a beed role of decisions of
this Court that the Corporation or a Statutory Authority or an instru-
·mentality or other authority under Art. 12 of the Constitution is not B
free, like an ordinary master (a private employer), to terminate the
services of its employees at its whim or caprices or vagary. It is bound
by the Act and the Regulation and the paramount law of the land, the
Constitution.

Nature of the Power Statutory Authority to terminate the services
of its employees. c
6. In Sukhdev Singh v. Bhagatram, [!975] 3 SCR ..619 ~ AIR
1975 SC. 1331, the Constitution Bench of this Court put a nail in the
coffin of the play of the private master's power to hire and fire his
employees and held that Regulations or Rules made under a Statute D
apply uniformly to everyone or to all members of the same group or
class. They impose obligations on the statutory authorities who cannot
deviate from the conditions of service and any deviation will be
enforced through legal sanction of declaration by Courts to invalidate
the actions in violation of the Rules or Regulations. The statutory
bodies have no free hand in framing the terms or conditions of service of E
their employees. The Regulations bind both the authorities and also
the public. The powers of the statutory bodies are derived, controlled
and restricted by the Statutes which create them and the Rules and
Regulations framed thereunder. The Statute, thereby fetters on the
freed.om of contract. Accordingly declaration was granted that dismis-
sal or removal of an employee by statutory Corporation in contraven- F
tion of statutory provision as void. Mathew, J. in a separate but con-
current judgment held that a Public Corporation being the creation of
a Statute is subject to statutory limitations as a State itself. The pre-
conditions of this Part II viz., that the corporation is created by Statute
and the existence of power in the corporation is to invade a statutory
right of the individual. Therefore, the governing power must be sub- G
ject to fundamental statutory limitations. The need to subject the power
centres to the control of the Constitution requir,es an expansion of con-
cept of State action. The duty of State is affirmative duty seeing that all
essentials of life are made available to all persons. The task· of State
today is to make the achievement of good life both by removing obsta-
cles in the path of such achievement and by assisting individual in realis- H
•

294 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

ing his ideal of self-perfection. The employment under public corpora:
A
tion is a public employment and, therefore, the employee should have
the protection which appurtains to public employment.
(emphasis supplied).
The Court must, therefore, adopt the attitude that declaration is a
normal remedy for a wrongful dismissal in case of public employees
B which can be refused in exceptional circumstances. The remedy of
declaration should be a remedy made an instrument to provide rein-
statement in public sector. This principle was extended to numerous
instances where the termination of services of the employees of a
statutory corporation was affected in violation of, the principles of
natural justice or in transgression of the statutory rules etc. In U. P.
State Warehousing Corporation v. N. V. Vajpayee, [1980) 2 SCR 737 at
c p 780 F to G and 783G to 784A this Court held that statutory body
cannot terminate the services of its employees withou.t due enquiry
held in accordance with the principles of natural justice. The persons
in public employment are entitled to the protection of Articles 14 J;lnd
16 of the Constitution, when the service was arbitrarily terminated.
D The question, therefore, is whether the statutory corporations are
entitled to be invested with absolute freedom to terminate the services
of its employees in terms of the contract of service.

7. In Ramana v. International Airport Authority of India, [1979)
3 SCR. 1014 = (1979) SC. p. 1628 this Court held that expression of
E welfare and social service functions necessitates the State to assume
control over natural and economic resources and large scale natural
and commercial activities. -For the attainment of socio-economic
justice, there is vast and notable increase of frequency with which
ordinary citizens come into relationship of direct encounters with the
State. The Government in a welfare state is the regulator and dis-
F penser of social services and provider of large number of benefits,
including jobs etc. Thousands of people are employed in Central/State
Government Services and also under local authorities. The Govern-
ment, therefore, cannot act arbitrarily. It does not stand in the same
position as a private individual. In a democratic Government by rule
of law, the executive Government or any of its officers cannot held to
G be possessed of arbitrary power over the interests of the individuals.
Every action of the Government must be informed with reason and
should be free from arbitrariness. That is the very essence of rule of
law. It was further held:

"Jt was, therefore, be taken to be the law that where the
H Government is dealing with the public, whether by way of
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.] 295

giving jobs or · entering into contracts . . . . . . . . . . the
A
Government cannot act arbitrarily at its sweet will and, like
a private individual, deal with any person it pleases, but its
action must be in conformity with standard of norm which,
is not arbitrary, irrational or irrelevant. The power of dis-
cretion of the Government in the matter of grant of largess
including award of jobs, ......................... must B
be conditioned and structured by rational relevant and
non-discriminatory standard or norm and if the Govern-
ment departs from such standard or norm in any particular
case or cases, the action or the Government would be liable
to be struck down, unless it can be shown by the Goverri-
ment that the departure was not arbitrary, but was based
on some valid principle which in itself was not irrational". c
unreasonable or discriminatory."

This statement of law, though was made in the context of con-
:t
tractual relations, it is a general law with width and amplitude which
permeates the entire spectrum. of actions, legislative as well as D
executive.

8. The Constitution is the permanent law of· the land and its
preamble is an integral part thereof. It assures Social and Economic
Justice and also accords equality of opportunity and status as well as
equality before law assuring dignity of the individual. The Constitution E
Forty Second Amendment Act introduced "Socialism" in the Pream-
ble and made explicit of what is latent in the Constitutional Scheme.
Article 14 accords equal protection of law and equality ·before law.
Artide 16( 1) provides right to an appointment or employment to an
office or post under the State. Article 19(1)(g) assures right to occupa-
tion or avocation. Art. 21 assures right to life and any deprivation is as F
per the procedure established by law. In Geneml Manager, Southern
Railway v. Rangachari, (1962] S.C.R. page 586 it was held that matters
tel a ting to employment would include salary, increments, leave,
gratuity, pension, age of superannuation etc. Similarly, in respect of
appointments, such matters would. include all the terms and conditions
of service pertaining to the said office. All those matters are included G
in the expression "matters relating to employment or appointment"
within the meaning of Art. 16( 1) of the Constitution. This was
reiterated in State of M.P. v. Shardul Singh, [1970) 3 S.C.R. page 302
at 305-306 that conditions of service include holdiQg of posts _right
'from the time of appointment till his retirement beyond it like pension
etc. The m1ddle class, lower middle class and lower Classes' •educated H
296 SUPREME COURT REPORTS I 1990] Supp. I S.C.R.

youths generally, if not mainly, depend on employment or appoint-
A
ment to an office or posts under the States which include corporations,
statutory body or instrumentality under Art. 12 of the Constitution as
source to their livelihood and means to imporve their intellectual
excellence and finer facets of life individually and collectively as a
member of the society so that himself and his dependents are economi-
B cally sound, educationally advanced and socially dignified so that the
nation constantly rises to standards of higher level in an egalitarian
social order under rule of law as is obligated under Art. 5 IA(J).

Right to life scope of

9. The right to life, a basic human right assured by Art. 21 of the
c Constitution comprehends something more than mere animal exis-
tence i.e. dignity of the individual. Field J. in Munn v. Illinois, [1876]
94 US 113 and 154 held that by the term "life" as here used, something
more is meant than mere animal existence. The inhibition against its
deprivation· extends to all those limbs and faculties by which life is
D enjoyed. The deprivation not only of life but of ..... if it a efficacy be
not fettered away by Judicial decision. Jn Kharak Singh v. State of
U. P., [ 1964] 1 SCR 332 this Court approved the definition of life given
by Field J. in his dissenting opinion, Jn Olga Tellis v. Bombay Munici-
pal Corporation, [1985] 2 Suppl. SCR page 51 at 79 this Court further
laid that an equally important facet of the right to life is the right to
E livelihood because no person can live without the means of livelihood.
If the right to livelihood is not treated as a part of the Constitutional
right to life, the easiest way of depriving a person of his right to life
would be to deprive him of his means of livelihood to the point of
abrogation ..... That, which alone can make it possible to live, leave
aside which makes life liveable, must be deemed to be an integral
F component _of the right to life ..... The motive force which propels
their desertion of thefr hearths and homes in the village is the struggle
for survival, that is the struggle for life. So unimpeachable is the nexus
between life and the means of livelihood. Right to life does not only
mean physical existence but includes basic human dignity, vide
Menaka Gandhi v. Union of India, [1978] 2 SCR 621 John Stuart Mill
G in his 'Consideration of Representative Govt.' said years ago that
"the power of the State is to promote virtue and intelligence of the
people". In State of Maharashtra v. Chander Bhan, [1983] 3 SCR 387
= AIR 1983 SC 803 Chinnappa Reddy, J. held that public employment
opportunity is a national wealth in which all citizens are equally
entitled to share and Varadarajan, J. held that public employment is·
H the property of the nation which has to be shared equally. This rule
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.[ . 297

was laid when rule 15(1)(ii)(b) of B.C.S. Rules to pay subsistence
A
allowance during period of suspension @ Rs.1 per month pending
departmental enquiry was challenged and declared the rule as ultra
vires by operation of Arts. 14, 16, 21 and311(2).

The right to public employment and its concomitant right to
livelihood, thus, receive their succour and nourishment under the B
canopy of the protective umbrella of Arts. 14, 16(1), 19(1)(g) and 21.
Could statutory law arbitrarily take away or abridged or abrogated it?
In Board of Trustees, Port of Bombay v. Dilip Kumar, [1983] 1 SCR
828 = AIR 1983 SC 109 this Court held that the expression "life" does •
not merely connote animal existence or a continued drudgery through
life, the expression life has a much wider meaning. Where, therefore,
the.outcome of a departmental enquiry is likely to affect reputation or c
livelihood of a person, some of the finer graces of human civilisation
which makes life worth living would be jeopardised and the same can
be put in jeopardy only by .\aw which inheres fair procedure.

In Workmen of Hindustan Steels Ltd. v. Hindustan Steel Ltd. & D
Ors., [1985] 2 SCR 428 it was held that the standing order 31 which
confers arbitrary, uncanalised and drastic power on the Manager to
dismiss an employee without enquiry, apart from being in violation of
basic requirement of natural justice, is such a drastic nature as to effect
the livelihood and put a stigma on the character of the workman. In
Francis Cora/lie v. U.T. of Delhi, [1981] 2 SCR 516 =AIR 1981 SC E
746 this Court held that "it is for the Court to decide, in exercise of its
constitutional gower of judicial review, whether the deprivation of life
or personal liberty ·in. a given case is by procedure which is reasonable,
fair and just and fair treatment". The tests of reason and justice cannot
be abstract nor can be divorced from the actualities of life and the
needs of the Society. The tests applied must be pragmatic and purpo- F
sive lest they cease to be reasonable. Reasonableness must be mean-
ingful and efficacious in content as well as in form. The procedure
provided in Rule 9(b) or allied rules, therefore, must not be just, fair
and reasonable so as to be in conformity with Arts. 14 and 21 is the cry
of the case.
G
10. The position of the public employee is whether status:

The distinguishing feature of public· employment is status. In
Roshanlal Tandon v. Union of India, [1968] 1SCR185 at 195-196 the
Constitution Bench held that the legal position of a Government
s_er\iant is more one of status than of contract. The hall-mark of status H
298 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

is the attachment to a legal relationship of rights and duties imposed by,
A
the public law and not by mere agreement of the parties. the employ-
ment of the Government servant and his terms of service are governed
by statute or statutory rules. Once he is appointed to the post or office,
the Government servant acquires a status and his rights and obliga-
tions are no longer determined by consent of both parties but by
B Statute or Statutory Rules. The relationship between the Governrrient
and its servants is not like an ordinary contract of service between a
master and servant. The legal relationship is in the nature of status.
The duties of statute are fixed by the law and in the enforcement of the
• duties society has an interest. 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. In Calcutta
c Dock Labour Board v. Jaffar Imam, [1965] 3 SCR 463 it was held that
the statutory sc.heme of employment confers on the worker a status.
An unlawful act is an interference with status. This view was followed
in Sirsi Municipality v. Cecelia Korn Francis Tellis, [1973] 3 SCR 348
Beg, J. (as he then was) held that the principles applicable to the
D relation of a Private Master and servant unregulated by statute, could
not apply to the cases of a public statutory body exercising powers of
punishment fettered or limited by statute and relevant rules of proce-
dure. This Court in a recent decision extended all the benefits of pay
scales to all the Central Government Corporate Sector employees. It
is, thus, I hold that the employees of the corporations, statutory
E authority or instrumentality under Art. 12 have statutory status as a
member of its employees. The rights and obligations are governed by
the relevant statutory provisions and the employer and employee are
equally bound by that statutory provisions.

11. Nature of the right of a pe'rmanent employee to a post
F
In Purushottam Lal Dhingra v. Union of India, [1958] ,SCR 828
at 841-843 it was held that the appointment to a permanent J?OSt may
be substantive or on probation or on officiating basis. A substantive
appointment to a permanent post 'in a public service confers normally
substantive right to the post and he becomes entitled to hold a lien on '
G the post. He is entitled to continue in office till he attains the age of
superannuation as per rules or is dismissed or removed from serVice
J( for inefficiency, misconduct or negligence or any other disqualification
in accordance with the procedure prescribed in the rules, and fair and
resonable opportunity of being heard or on compulsory retirement or
11 in certain circumstances, subject to the conditions like re-employment
H on abolition of post. In Motiram Daka v. General Manager, [1964] 5

:~.
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.j 299

SCR 683 at 718-721=AIR 1964 SC 600 at 608 & 609 majority of seven A
Judges' Bench held that a permanent post carries a definite rate of pay
without a limit of time and '1 servant who substantively hotds a per-
manent post has a title to hold the post to which he is substantively
appointed, and that in terms, means that a permanent servant has a
right to hold the post until, of course, he reaches superannuation of
a
. until he is compulsorily retired under the relevant rule. If for any other
reason that right iS Invaded and he is asked to leave the service the
- termination of his service must invitably mean the defeat of his right to
continue in- service and as such, it is in the nature of penalty and·
amounts to temoval. in other words, termination of service of a pet-
tnanent servant, otherwise than on superannuation of compulsory .
retirement, must per se amount to his removal and so, by Rule 148(3) C
or llule 149(3) of Rly. Establishment Rules if such a termination is
brought about, the rule clearly contravenes Art. 311(2) and must be
held to be invalid. A permanent employment assures security of tenure
which is essential for the efficiency and incorrilptibility of pubiic
administration. _In Gurudev Singh Sidhu v. State of Pepsu, 11964} 7
SCR 587 =AIR 1964 SC 1585 another Constitution Bench held that for D
efficient administration of the State, it is absoluteiy essential that per-
manent public servant should enjoy a sense of security of tenure. The
safeguard which Art. 311(2) affords ls no more than this that in case it
is intended to dismiss or remove or reduce them in rank, a reasonable
opportunity should be given to them of showing cause against the
action proposed to be taken iJi regard to them. In Motiram Daka's case E
(supra) it was further held that in a modem democratic State, the
efficiency and incorruptibility of public admirtistratiort is of such
importance that it is essential to afford to civil servants adequate pro-
tection against capricious action from their superior authority. If a
permanent civil servant is guilty of misconduct, he should no doubt be
proceeded against promptly under the relevant disciplinary rules, sub- F
ject, of course, to the safeguard prescribed by Art. 311(:i); bllt in
regard to honest, siraight-forward and efficient permanent .civil seP
vants, it is of utmost importance, even from the point of view of the
·State~' that they should enjoy a sense of seciinty which aione can make
them independent and truly efficient. The, sword of damocles hanging
over the head~ of permanent railway servants in the form of Ri,Jle 0
148(3) or Rule 149(3) wouid inevitably create a sense of Insecurity in
the minds of .such servants and would invest appropriate authorities
with very wide powers which may conceivably be abused. Thereby this ,
Court laid emphasis that a permanent employee has a right or lien on,
t~e post he holds until his tenure of service reaches superannuation so ·
as to eaf? pension at the evening of his life unless it is deietmined as H
300 SUPREME COURT REPORTS I 1990] Supp. 1 S.C.R.

per law. An assurance of security of service to a public employee is an
A
essential requisite for efficiency and incorruptibility of public ad-
ministration. It is also an assurance to take independent drive and
initiative in the discharge of the public duties to alongate the goals of
social justice set down in the Constitution.

B This Court in Daily Rated Casual Labour v. Union of India,
[1988] 1 SCR 598=[1988] 1 SCC 122 at 130-131 further held that the
right to work, the right to free choice of employment, the right to just
and favourable conditions of work, the right to protection against
unemployment etc., and the right to security of work are some of the
rights which have to be ensured by appropriate legislative and execu-
tive measures. It is true that all these rights cannot be extended
c simultaneously. But they do indicate the socialist goal. The degree of
achievement in this direction depends upon the economic resources,
·willingness of the people to produce and more than all the existence of
industrial peace throughout the country. Of those rights the question of
security of work is of most importance. If a person does not have the
D feeling that he belongs to an organisation engaged in production he will
not put forward his best effort to produce more. (emphasis supplied)
That sense of belonging arises only when he feels that he will not be
turned out of employment the next day at the whim of the manage-
ment. It is for this reason it is being repeatedly observed by those who
are in charge of economic affairs of the countries in different parts of
E the world that as far as possible security of work should be assured to
the employees so that they may contribute to the maximisation of
production.

12. It must, therefore, be held that a perma,nent employee of a
statutory authority, corporation or instrumentality under Art. 12 has a
F lien on the post till he attains superannuation or compulsorily retired
or service is duly terminated in accordance with the procedure
established by law. Security of tenure ensures the benefit of pension
on retirement. Dismissal, removal or termination of his/her service for
inefficiency, corruption or other misconduct is by way of penalty. He/
she has a right to security of tenure which is essential to inculcate a
O sense of belonging to the service or organisation and involvement for
maximum production or efficient service, It is also a valuable right
which is to be duly put an end to only as per valid law.

13. How to angulate the effect of termination of service
,.
H Law is a social engineering to remove the existing imbalance and
b.T.C. v. D.T.C. MAZDOOR CONGRESS [iC RAMASWAMY, J.J 301

to further the progress, serving the needs of the Socialist bemoctatic A
Bharat under ruie of law. The prevaiiing social conditions and actuaii-
ties of life are to be taken into account to adjudging whether the
impugned legislaiion would subserve the purpose of the society. The
arbitrary, unbridd.led and naked power of wide discretion to dismiss a
permanent employee without any guidelines or procedure would tent\
to defeat the constitutional purpose of equality and allied purposes B
referred to above. Courts would take note of actualities of iife that
persons actuated to corrupt practices are capable, to mahOuvet with
higher echolons in diverse Ways and aiso camouflage their activities by
b.ecoming sycophants or chronies to the superior officers. Sincere,
honest and devoted subordinate officer unlikeiy to lick the boots of the
corrupt superior officer. They develop a' sense of self-pride for their C
honesty, integrity and apathy and inertia towards. the corrupt and tent
to undermine or show signs of disrespect or disregard towards them.
Thereby, they not only become inconvenient to the corrupt officer but
also stai1d an impediment to the on-going smooth siph.ony of cornip·
tion at a grave risk to their prospects in career or even to their tenure
of office. The term efficiency is an elusive and relative one to the adept. I)
capable to be applied in diverse circumstances. If a superior officer
develops likes towards sycophant, tough corrupt, he wouid tolerate
him and foutld him to be efficient and pay encomiu!l's and corruption
in such cases stand no impediment. When he finds a sincere, devoted
and honest officer to be inconvenient, it is easy to cast him/her off by
writing confidential with delightfully vague language imputing to be E
'not upto the mark', 'wanting public relations' etc. Yet times they may
be termed to be "security risk" (to their activities). Thus they spoil the
career of the honest, sincere and devoted officers. instances either way
are gallore in this regard. Therefore, one would be circumspect,
pragmatic and realistic to these actualities of life while angulating
constitutional validity of wide arbitrary, uncanalised .and unbriddled F
discretionary power of dismissal vested in an appropriate authority
either by a statute or a statutory rule. Vesting arbitrary power would
be a feeding ground for nepotism and insolence; instead of subserving
the constitutional purpose, it would defeat the very object, in particu-
lar, when the tribe of officers of honesty, integrity and devotion are
struggling under despondence to continue to maintain· honesty, inte- G
grity and devotion to the duty, in particular, when moral values and
ethical standards are fast corroding in all walks of life including public
services as well. It is but the need and imperative of the society to pat
on the back of those band of honest, hard-working officers of integrity
and devotion to duty. It is the society's interest to accord such officers
security of service and avenues of promotion. H
302 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

That apart, the haunting fear of dismissal from service at the
A
vagary of the concerned officer would dry up all springs ofidealism of
the employee and iii the process coarsens the conscience and degrades
his spirit. The nobler impulses of minds and the higher values of life
would not co-exist with fear. When feat haunts a man, happiness
vanishes.· Where fear is, justice cannot be, where fear i~,. freedom
cannot be. There is always a carving In the human for satisfaction of
the needs of the spirit; by arming by certain freedom for some basic
values without which life is not worth-living. It is only when the
satisfactioii of the physical needs and the demands of the spirit co-
exists; there will be true efflorescence of the human personality and
the free exercise of individual faculties. Therefore, when the Constitu-
tion assures dignity of the individual and the right to livelihood the
exercise of the power by the executive should be cushioned with
adequate safeguards for the rights of the employees against any
arbitrary and capracicous use of those powers.

Coniract of service must be consistent with .the Constitution.
D
14. From the above perspective vis-a-vis constitutional, social
goals and rights of the citizens assured in the preamble, Parts III & IV
i.e. the trinity, the question whether the statutory corporation or the
instrumentality or the authority under Art. 12 of the Constitution is
validly empowered to terminate the services of a permanent employee
in terms of the contract of employment or rules without conducting an
enquiry or ah opprotunity of show cause of pr.ciposed order of termina-
tion of the service. The Indian Contract Act, 1872 operatjng In British
India was extended to the merged States in 1949 & 1950 except to the
State of fammu & Kashmir. Therefore, after Bharat attained inde-
pendeiice ort August 15, 1947; the Indian Contract Act is applicable to
F ail States ei!:cept Jammu & Kashmir. By operation of Article 372 of the
Constitution, the Indian Contract Act continues to be in operation
subject to the provisions of the Constitution. The Indian Contract Act
is an amending as well as consolidating Act as held in Ramdas
Vithaldas Durbar v. S. Amerchand & Co., 43 Indian Appeals 164.
Thereby eommon law principles applicable in England, if they are
G inconsistent with or derogation to the provisions of the Indian Con-
tract Act or the Constitution to that extent they stand excluded. Any
law, muchless the provisions of Contract Act, are inconsistent with the
fundamental rights which guaranteed in Part III of the Constitution,
by operation of Articles 13 of the Constitution, are void. Section 2(h)
of the Indian Contract Act defines "an agreement" including an agtee-
meht of service and becomes a contract only when it is enforceable by
D.T.C. v. p.T.C. MA;l:DOOR CON9RESS [K. !lAMASWA!\fY, J.] 303

law. If it is not ~nforce.able it would be void by reason of section 2(g)
thereof. The questiol), ttierefore, js whether the con(ract of service or
Regulation 9(b) in derogation to tne F1,mdame1ltal Rigpts guara)1teec!
in Part III pfthe Constitution is valid in law and woulg be enforceable.

(:ontract i.yh~ther changeable with cha,nping times.

15. The law of .contract, _like the legal system itself, involves a
balance between competing sets of values. Freec!<.Jm of contract
emphasises the need of stability, q:rtainty and predictability. aut,
important as is values are, they are not absolute, and there comes a
point where they "face a serious challenge" against them must be set the
values of protecting the weak, oppressed and the thoughtless from im, C
position and oppressed. Naturally, at a particular time, one set of value
tends to be empbasised at the expense of th_e other !IS"the time changes tile
values get changed and the old values are under replacement and new
values take their due place. Though certainty and predictability in
ordinary commercial contract law is emphasised and insisted upon the
need for progress of the society and to removing the disabilities faced D
by the -citize_ns and their rel!ltions when encounter witl) the State or its
instrum~nt~lities are jo conflic~ with th~ assureQ constitutional rigbts
demal)d new values and begin to assert ·themselves, for no civilised
syste_m of law can accept the implications of absolute sanctity of con-
tractual <.lb ligations and of their immutability.
E
In paragraph 4 of Chitty on Contracts (25th Edition, Voh1me-i)
it is stated that "freedom of contract is a reasonable social ideal only to
the extent that .equality of bargaining power between contracting
parties can be assumed .and no injury is done to the economic interest
of the community at large.
F
In Anson's Law of Contr_act at p. 6 & 7 stated the scope of
freedom ·of contmct in the-changing circumstances thus: ·

"Today the position is seen .ii) a very different light. Free-
dom of contract is a reasonable .social ideal .only to the
·extent that equality pfbargaining power between cpntract, O
ing parties can be assumed, and no injury is done to the
economic interests of the community at large. In the more
- complicated social and industrial conditions of a collectivist
society it has ceased to have much idealistic attraction. It is
now realisedthat economic.equality :often does not ,exists ii)
al))' real sel)Se, and that individual· in!erests have to be lJ
304 SUPREME COURT REPORTS [ 1990) Supp. 1 S.C.R.

made to subserve those of the community hence there has ...
been a fundamental change both in our social outlook and
in the policy of the legislature towards contract and the law
today interferes at numerous points with the freedom of
the parties to make what contract they like. The relation
between employers and employed, for example, have been
regulated by sta_tutes designed to ensure that the employees
condition of work are safe, that he is properly protected
against redundancy and that he knows his terms of service.
The public has been protected against economic pressure
·· by such measures as the Rent Acts, the supply of goods
(implied terms) at, the consumer Credit Act and other
similar enactments. These legislative provisions will over-
c ride any contrary terms which the parties may make for
· themselves. Further, the legislature has intervened in the.
Restrictive Trade Practice Act 1956 and the Fair Trading
Act, 1973 to promote competition in industry and to safe-
. guard the interests of consumers. This intervention is
D specially necessary today when most contracts entered by
ordinary people are not the result of individual negotiation.
It is not possible for a private person to settle the terms of
his agreement with a British Railways Board or with a local
electricity authority.

E The 'standard form' contract is the rule. He must either accept the
terms of this contract in toto, or go without. Since, however, it is not
feasible to deprive onself of such necessary services, the individual is
compelled to accept on those terms. In view of this fact, it is quite clear
that freedom of contract is now largely an illusion.

F 16. The trinity of the Constitution assure to every citizen Social
and Economic Justice, Equality of. Status and of opportunity with
dignity of the person. The State is to strive to minimise the inequality
in income and eliminate inequality in status between individuals or
groups of people. The State has intervened with the freedom of con-
tract and interposed by making statutory law like Rent Acts, Debt
G Relief Acts, Tenancy Acts, Social Welfare and Industrial Laws and
Statutory Rules prescribing conditions of service and a host of other
laws. All these Acts and Rules are made to further the social solidarity
and as a step towards establishing an egalitaran socialist order. This
Court, as a court of constitutional conscience enjoined and a jealously
to project and uphold new values in establishing the egalitarian social
H order. As a court of constitutional functionary exercising equity juris-
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.j 305

diction, this Court would relieve the weaker parties from unconsti\uc
tional contractual obligations, unjust, unfair, oppressive and uncons-
A
cienable rules or conditions when the citizen is really unable to meet
on equal terms with the State. It is to find whether the citizen, when
entered into contracts or service, was in distress need or compelling
circumstances to enter into contract on dotted lines or whether the
citizen was in a position of either to "take it or leave it" and if it finds B
to be so, this Court would not shirk to avoid the contract by ap-
propriate declaration. Therefore, though certainty is an i!IlpOrta[)t
value in normal commercial contract law, it is not an absolute and
immutable one but is subject to change in the changing social
conditions.

17. In Brojonath's case, Madan, J..\\laborately considerecl the c
development of law relating to unfair or 'anreasonable terms of tlJe
contract or clauses thereof in extenso ancl it is unnecessary for me to
traverse the same grounds once over. The learned Judge al~o co11-
sidered the arbitrary, unfair and unbridled power on the envil of dis-
tributive justice or justness or fairness of the procedure envisaged D
therein. The relevant case law in that regard was dealt with in extenso
in the light of the development·of law in the Supreme Court of United
States of America and the House of Lords in England and in th.e
continental countries. To avoid needless burden on the judgment, I do
not repeat the same reasoning. I entirely agree with the reasoning and
the conclusions reached therein on all these ~spects. · E

Whether State can impose unconstitutional Conditions.

18. The problem also would be broached from the anglewhether
the State can impose unconstitutional conditions as part of the contract
or statute or rule etc. In 1959,60 73 Harvard Law Review, in the Note F
under the Caption 'Unconstitutional Condition' .at page 1595-96 it is
postulated that the State is devoid of power to impose unconstitutional
conditions in the contract that the power to withhold largess has been
asserted by the State in four areas i.e., ( 1) regulating the right to
engage in certain activities; (2) Administration of Govrnment welfare
programme; (3) Government employment; and (4) Procurement of G
contracts. It was further adumberated at pages 1602-1603 thus:

"The sovereign's COQstitutiop.8.1 authority to choose those
with whom i! will Contract for goods and services is in effeci
a power to withhold the benefits to be deprived from
economic dealings with the government. As government H
~06 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

11ctivity in the economic sphere increases, the contracting
A
power eqables the government to control many hitherto
unregulated activities of contracting parties through the
imposition of conditions. Thus, regarding the government
as a private entrepreneur threatens to impair constitutional
rights ... , . The Government, unlike a private individual,
B is limited in its ability to contract by (he Constitution. The
federal contracting power is based upon the Constitution's
authorisa(ion of these acts 'necessary and proper' to the
carrying out of the functions which it allocates to the
national government,-Unless the objectives sought by
terms and conditions in government contracts requiring the
S\lrrender of rights are constitutionally authorised, the con-
c ditions must fall as ultra vires exercise of power."

Again at page 1603, it is further emphasised thus:

"When conditions limit the economic benefits to be deri-
p ved from dealings with the government to those who forego
the exercise of constitutional rights, the exclusion of those
retaining their rights from participation in the enjoyment of
these benefits may be a violative of the prohibition,
implicit in the due process clause of fifth amendment and
explicit in the equal protection clause of the fourteenth
E amendment against unreasonable discrimination in the
Governmental bestow of advantages. Finally, disabling those
.exercising certain rights from participating in the advan-
tages to be derived from contractual relations with the
government may be a form of penalty lacking in due pro-
cess. To avoid invalidation for any of the above reasons, it
F must be shown that the conditions imposed are necessary to
secure the legitimate objectives of the contract ensure its
effective use, or protect society from the potential harm
which may result from the contractual relationship between
the government and the individual.

G 19. Professor Guido Calabresi of Yale University Law School in
"" his "Retroactivity, Paramount power and Contractual Changes'
( 1961-62) 71 Yale Law Journal P. 1191 at 1196) stated that the Govern-
ment can make contracts that are necessary and proper for carrying
out any of the specific clauses of the Constitution or power to spend
for general welfare. The Federal Government has no power, inherent
H or sovereilln, other than those specifically or explicitly granted to it by
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.] 307

the Constitution. At page 1197, it is further stated thus: A

"The Government acts according to due process standards
for the due process clause is quite up to that task without
the rule. Alterations of Government contracts are not
desirable in a free country even when they do not consti-
B
tute a 'taking' of property or impinge on questions of
fundamental fairness of the type comprehended in due pro-
cess. The government may make changes, but only if war
or commerce require them and not on the b:oader .and
more ephemeral grounds that the general welfare would be
served by the change. Any other rule would allow the
Government to welch almost at will." c
20. These principles were accepted and followed by the. Andhra
Prades\1 High Court in V. Raghunadha Rao v. State of Andhra
Pradesh, (1988] 2 A.LT. 461 dealing with A.P. Standard specification
Cla\lses 11, 29, 59, 62(b) and 73 and declared some clauses to be ultra
D
vires of Articles 14, 19(1)(g) and 21 of the Constitution and Sections 23
and 27 of the Contract Act.

21. In Brojonath's case (supra) af\er elaborate consideration of
the doctrine of "reasonableness or fairness" of .the terms and condi-
tions of the contract vis-a-vis the relative bargaining power of the
contracting parties this Court laid down that the principles deducable E
from the discussion made therein is in consonance with right or reason
intended to secure socio-economic justice and conforms to mandate of
the equality clause in Article 14. Tlie principle laid was that courts will
not enforce and will, when called upon to do so, strike down an unfair
and unreasonable contact or- an unfair and unreaSonitble clause in a
contract, entered into between parties who are not equal in bargaining F
power ..... It will apply to situations in which the weakervarty' is in a
position in which he can obtain goods or services or means of liveli-
hood only upon the terms imposed by the stronger party or go without
them. It will also apply where a man has no choice, or rather no
meaningful choice, but to give his assent to a contract or to sign on the
dotted line in a prescribed or standard form or to accept a set of rules G
as part of the contract, however unfair; unreasonable and unconscien·
able a clause in that contract or form or rules may be. This principle,
however, will not apply where the bargaining power of the contracting
parties is equal or almost equal or where both parties are businessmen
and the contract. is a commercial transaction;
H
308 SUPREME COUR1 REPORTS [ 1990) Supp. 1 S.C.R.

A 22. In today's complex world of giant corporations with their
vast infra-structural organisations and with the State through its
instrumentalities and agencies has been entering into almost every
branch of industry and commerce and field of service, there can be
myriad situations whi.ch result in unfair and unreasonable bargains
between parties possess wholly disproportionate and unequal bargain-
B ing power. These cases can neither be enumerated nor fully illustrated.
The court must judge each case on its own facts and circumstances.

Public policy whether changeable.

23. This Court also angulated the question from the perspective
of public policy or contract being opposed to public policy. The
c phrases "public policy", "opposed to public policy", or "contrary to
public policy" are incapable of precise definition. It is valued to meet
the public good or the public interest. What is public good or in the
public in.terest. or what would be injurious or harmful to the public
good or the public interest vary from time to time with the change of
D the circumstances. New concepts take place of old one. The transac-
tions which were considered at one time as against public policy were
held by the courts to be in public interest and were found to be
enforceable. Therefore, this Court held in Brojonath's case that "there
has been' no well-recognised head of public policy, the courts have not
shirked from extending it to new transactions and changed circums-
E tances and have at times not even flinched from inventing a new head
ofpublic."

Lord Wright in his legal Essays and Addresses Vol. III p. 76 and
78 -stated that public policy like any other branch of the common law
ought to be and I think is, governed by the judicial use of precedents
F ....•. If it is said that rules of public policy have to be moulded to suit
new conditions of a changing world, that is true, but the same is true
with the principles of the cannon law generally; Lord Lindley held in
Janson v. Driefontein Mines Ltd., [1902] A.C. p. 484 and 507 that "a
contract or other branch which is against public policy i.e. against the
generarinterest of the country is illegal."
G
24. In Anson's Law of Contract, 24th Edition by A.G. Guest at
p·. 335 stated the scope of variability of public policy attune to the
needs of the day and the march oflaw thus:

"At the present time, however, there is an increasing
H recognition of the positive function of the Courts in matters
l),f,(::, v, O.ft MAZDOOR CONGRESS [K. RAMASWAMY, l.i 309

of public poiicy: 'The iaw relaiihg io public poHcy cannot
remain iniitmtable. Ii must change with the passage of
A
time. tile wind otehaiige blows lipori ii', Sofue asjlecis of
public policy ate inofe stisceptibie io change thiiii othet!i,
duririg the poiicy of the law has, tin certain stibjeds, beeti
Worked itlto a set of wierably defltiite rtiies. The ptitlciples
appiicabie to agreeinetits in restraint of trade, fot exarnjlie,
have on a number of occasions beeri modified bt extended
hi accord with prevailing ecotiomic ctJnditiotls, attd this
process sHli continufa
r
!ft law of tottifaci by tUt treiiel, 1ttt Editiot1 at p, 366 on the
·topic 'scope of the public poHcy' it is stated thus:
c
1
'J:lublic policy is a variable notion, dependlt1g otl changing
rtlahners, morals and ecot1 0 mlc cotlditions. ltt theory, this
flexibility of the doctrine of public policy could provide la
judge with an excuse for ihvaiidating any co.ntract which he
vitJlehtly disliked. On the othet hand, the law does adapt D
itself to change in economic and social cot1ditions, as can be
seen particularly from the developrtlefit of the tUles as to
cortttacts in restraint of public policy has often been tecO·
gnised judicially. thus Lord Haldane has said; "What the
law recognises as contrary to public policy turns out to vary
greatly from time to time." And Lord Det1ning has put a I'!
similar point of view. "with a good man in the saddle, the
unruly horse can be kept in control. It can jump over obsta·
cl es." '.fhe present attitude of the Courts represents a
compromise between the flexibility inherent in the notion
of public policy and the need for certainty in comm.ercial
affairs." F

25. From t.his P.erspective, it must be held that in the absence of
specific head of public policy which covers a case, then the court must
in consonance with public conscience and in keeping with public good
and public interest invent new public policy and declare such practice
or rules that are derogatory to the constitutiort to be opposed to public, G
policy. 'I'he rules which stem from the public policy must of necessity
be I.aid to further the progress of the society in particular when social
change is to bring about an egalitarian social order through rule of law.
In deciding a case which may not be covered by authority courts have
before them. the beacon light of the trinity of the Constitution and the
play of legal li!\ht and shade must lead on the,path of justice social, H
310 SUPREME COURT REPORTS [ 1990) Supp. 1 S.C.R.

economical and political. Lacking precedent, the court can always be
A
guided by that light and the guidance thus shed by the trinity of our
Constitution.

Public policy can be drawn from the Constitution.

B 26. Sutherland, in his Statutes and Statutory Construction Third
Edition Vol. 3 paragraph 5904 at page 131-132 has stated that the most
reliable source of public policy is to be found in the federal and state
constitutions. Since constitutions are the superior law of the land, and
because one of their outstanding features is flexibility and capacity to
meet changing conditions; constitufrmal policy provides a valuable aid
in determining the legitimate boundaries of statutory meaning. Thus
c public policy having its inception in constitutions may accomplish
either a restricted or extended interpretation of the literal expression
of a statute. A statute is. always presumed to be constitutional and
where necesary a c9nstitutional meaning will be inferred to preserve
validity. Likewise, where a statute tends to extend or preserve a con-
D stitutional principle, reference to analogous constitutional provisions
may be of great value in shaping the statute to accord with the statut-
ory aim or objective.

Article 14 sheds the light to public policy to curb arbitrariness.

E 26A. In Basheshar Nath v. The Commissioner of Income-Tax &
Anr., [ 1959) Suppl. 1 SCR 528 S.R. Das, CJ., held that Article 14 is
founded on a sound public policy recognised and valued in all States
and it admonishes the State when it disregards the obligations imposed
upon the State.

F 26B. In E.P. Royappa v. State of Tamil Nadu & Anr., [1974) 2
SCR 348 Bhagwati, J. (as he then was) held that Article 14 is the genus
while Article 16 is a specie. Article 16 gives effect to the doctrine of
equality in all matters relating to public employment. The basic princi-
ple which. therefore, informs both Articles 14 and 16 is equality and
inhibition against discrimination. "Equality is a dynamic concept with
G many aspects and dimensions and it cannot be "cribbed, cabined and
confined" within traditional and doctrinaire limits. From a positivistic
point of view, equality is antithetic to arbitrariness. In fact, equality
and arbitrariness are sworn enemies; one-belongs to the rule of law in a
republic while the other, to the whim and caprice of an absolute
monarch. Where an act is arbitrary it is implicit in it that it is unequal
H both according to political logic and constitutional law and is therefore
D.T.C. v. D.T.C. MAZDOQR CONGRESS [K. RAMASWAMY, J.] ·311

violative of Article 14, and if it affects any matter .relating to public A
employment, it is also violative of Article 16. Articles 14 and 16 strike
at arbitrariness in State action and ensure fairness and equality of ·
treatrnenL In Menaka Gandhi's case it was further held that the princi-
ple of reasonableness, which legally as well as philosophically, is an
essential element of equality or non-arbitrariness pervades Article 14
like a brooding omnipresence. In Ramana's case it ·was held that it is B
merely a judiciai formula for determining whether the legislative or.
executive action in question is arbitrary and therefore constituting
denial of equality. If the classification is not reasonable and does not
satisfy the two conditions namely, rational ·relation and nexus the
impugned legislative or executive action would plainly be arbitrary and
the guarantees of equality under Article 14 would be breached. c
Wherever, therefore, there is arbitrariness in State action whether it
be of legislature or of the executive ot of an "authority" under Article
12; Article 14, "immediately sprfngs into action aµd strikes down such
State action." In fact, tl\e concept of reasonableness and non-arbi-
trariness pervades the entire constitutional scheme and is a golden
thread which runs through the whole of the fabric of the constitution.

27. In Volga Tellies' Case it was held that the Constitution is not
only paramount law of the land but also it is a source of sustenance of
all laws. Its provisions ·are conceived in public interest and are
intended to serve public purpose. Therefore, when ·the provisions of
an Act or Regulations or Rules are assailed as arbitrary, unjust. E
unreasonable, unconstitutional, public law element makes it incum··
bent to consider the validity thereof on the envil of inter play of Arts.
14, 16(1), 19(1)(g) and 21 and·of the inevitable effeCt of the impugned
provision on the rights of a citizen and to find whether they are con-
stitutionally valid.
F
Interplay of Arts. 14, 16(1), 19(l)(g) & 21.as guarantors of public
employment as a source of right to livelihood.

28. It is ·well settled consti(utional law that different Articles in
the Chapter on Fundamental Rights and the Directive Principles in
Part JV 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 Fundamental
Rights.

By the Full Court in R.C. Cooper v. Union of India, [1970] 3
SCR 530 it was held that the law must not impair the guarantee of any H
312 S!JPR!'~E ~OURT REPORTS l1990) Supp. 1 s.e.R.
of the f4npamental rights in Part-Ill, The law authcirising to impose
r~asol)able restrictjpns m1c:ler Article !9(1) must be intenc:lecl to
advi11we the 111rger public interest. Under the Constitution, protection
ll!lJlinst impairment Qf the g1rnr11ntee of the ful\damental rights is
f!etermineg lly the nature of \he right, int~rest of the agjlrievecl party
a11d the degree of !)arm res11!ting frnm the state actipn, Impairment of
B the right of the individual and not the object of the State in taking the
impugned ~ction is the measµre of protection. To concentrate merely
rm the power pf the State anc:I the object of the State action in exercis-
ing that power is, therefore, to ignore the true intent of the constitu•
ti on. The nature and content of the protection of the fundamental
rights is measured not lly the operation of the State action upon the
rights of the individual but by its objects. The validity of the State
c action must be adjudged iii the light of its operation upon the rights of
the individuals or groups of the individual in all their dimensions. It is
not the object of the authority making the law imparing the right of the
citizen nor the form of action taken that determines the Pro\~c\iQll qe
can claim; it is the effect of the law and of the action upop. the rigq(
D which attract the jurisdiction of the court to gra11t relief· ln ¥ineryq
Mills Ltd. v. Union of India, [1981] 1SCR206 the f4p.dawental rights
and directive principles are i)eld to be the conscie!lce pf !lw C1>11•fo1J-
tion and disregard of either woulcj upset the equibalance bl!ilt up
therein. Jn Menaka Gt.mdhi's case, it was held t!iat different articles iii
the chapter of Fundamental Rights of the Co11stit4\ioq ml!st be read as
E an integral whole, with possible overlapping of the subject ma\\er of
what is sought to be protected by its various prpvisions particl!Jarly by
articles relating to fundamental rights contained in P&rt m of the
Constitution do not represell( entirely separate streams of rights which
do not mingle at many PPh1\s. They are al\ parts of an .integrated
seheme in the Constitution, Their waters rn\lst mi~ to constitute that
grnm~ flow of \lnimpeded and impartial justice; social, economic and
pqlj\ic11l, ~nc! pf equality of status and opportunity which imply
absence of unreasonable or unfair discrimination between indivic:luals
or groups or classes. The fl!ndamental rights protectec! by Part Ill of
the constitution, out of which Articles 14, 19 and 21 are the most
frequently invoked to test the validity of exec\ltive 11s well as legislative
G actions when these actions are subjected to judicial scrutiny. Funda-
mental Rigtits are necessary means to develop one's own personality
llml \Q ~arv~ out one's own iife in the manner one likes best, subject to
reasonable restrictions imposecl in the paramount interest of the So·
cielY anqlo a just, fair ancf reaso.nable procedure, The effect of restric·
tiori or deprivation and no\ pf the form adopted to deprive the right is
H the conclusive test. It is alreac:ly seen that the right to a public employ·
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAl.jY, J.J ~)3

ment is a constitutional rigllt under Art. 16( 1). All ll!atters relatln!l li:i
employment include the right to continue in service till tlw employQe
reaches superannuation or his service is duly tennin&ted in accordance
with just, fair and reasonable procedure prescribe(! unc!er thl' prnvi"
sions of the Constitution or the Rules made under proviso IP Article
309 of the Constitution or the statutory provision or the Rllle~,_re!ll!la
tions or instructions having statutory flavour made t.hereun!ler' a111 the 'Q
relevant provisions must be conformable to the rights g11arliilteed in
t>arts III & IV of the Constitution. Article Zl g1111rnntees the ri!lhl lo
live which includes right to livelihood, to a many thi; assured tenurn pf
service is the source, the deprivation thereof must be in accordance
with the procedure .prescribed by law conformable to the mand11tes of
Articles 14 and 21 as be fair, just and reasonable but not fanciful,
oppressive or at vagary. The need for the fairness, justness or reason- c
ableness of the procei!ure was elaborately co11sidered in Menaka
Gandhi's case (supra) and it hardly needs reiteration.

Principles of natural j1,1stif;~ in Pprt of Article 14,

29. The Menaka Gandhi'.s case is also all ~!!!h<>riw f<>r !he pr()-
position that the principles gf natl!rnl justice is al1 i11tegra! p•!r( of the
guarantee of equality assurec! by Arii~le H <>f !!w co11stltutiol1· !11
Union of India & Anr. y. T11lsiram !'are!&: Orh frn§~] ~ypp!, ~ ~P~
131 at 233, this Court held that the principleHlf Qatl!rnl jY~ti~ hi!V~
thus come to be recognised as being a part pf th!' g1rnrn11t~e gi11tajne!!- g
in Article 14 because of the new and dynamic i11ti:rpr~tatipp given by
this Court to the concept of equality whkh is the S!!b)~et"illat!~r of t!ii!t
Article. Shortly put, the syllogism runs thys;

"Violation of a rule of natural justice resµ!t~ in at!litrnri'
ness which is the same as 11isctiminMion; wllere discrimina- p
tion is the result of th~ State action, it is a vio!atil'!!l gf 1\rt.
14, therefore, a violation of a prin~iple of natqr'!f jystice l:>y
a State action is a violation of Art, 14. Article 14, however,
is not the sole repository ofthe principles of natural justice.
What it does is to guarantee that any law or State action
violating them will be strl!ck dowIJ, The pri1wip!1's of G
natural justice, however, apply not only to the jegislMion
and State action but also where any tribunal, aYtfoiri!Y ()r
body of men, not coming within the !Jefinition gf '!i!tati:' ill
Art. 12, is charged with the attty of dec@ng a matt!'r, hi
such a case; the principles of 1mfor'!l justice reql)jre that it
_11_1ust decii:le such a matter fair!~ and impartially.;, tt
314 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

In Woti Ram Deka's case this Court already held that "the rule
A making authority contemplated by Article 309 cannot be validly exer-
cised so as to curtail or affect the rights guaranteed to public servants
under Art. 311(2). Article 311(2) is intended to afford a sense of
scrutiny to public servants who are substantively appointed to a per-
manent post and one of the princip1e benefits which they are entitled
to expect is the benefit of pension after rendering public service for the
B
period prescribed by the Rules. It would, we think, not be legitimate
to contend that the right to earn a pension to which a servant substan-
tively appointed to a permanent post is entitled can be curtailed by
Rules framed under Art. 309 so as to make the said right either ineffec-
tive or illusory. Once the scope of Art. 311(1) and (2) is duly determined,
it must be held that no rule framed under Art. 309 can trespass on
c the rights guaranteed by Art. 3 Ji. This position is of basic importance
and must be borne in mind in dealing with the controversy in question.

30. In A.K. Kraipak & Ors etc. v. Union of India & Ors., [1970]
1 SCR 457 this Court held that Rules of natural justice aims at securing
justice or to prevent injustice. They operate only in the areas not
D
covered by any law validly made. In Union of India v. Col. J.N. Sinha
and Anr., [1971] 1 SCR 791 it was held that principles of natural justice
do not supplant the law but supplement it. If a statutory provision
either specifically or by necessary implication excludes the application
of any rules of natural justice then the court cannot ignore the
mandate of the legislature or the statutory authority and read into the
E concerned provision of the principles of natural justice. In that case
this Court held that principles of natural justice cannot be read into
Fundamental Rule and no opportunity need be given before com-
pulsorily retiring an employee as that implication does not arise by
reason of express statutory language.
F 31. The principle of natural justice embodied as an integral part
of equality clause. Article 14 is the general principle while Art. 3JJ(2)
is a special provisi<m 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 circums-
G
tances enumerated in three clauses of the proviso to Art. 311(2) of the
Constitution, Article 14 read with Arts. 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 Art. 311(2) must, therefore, be circumscribed to the
civil services and to be construed accordingly. In respect of all oth_er
I-i
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.l 315

employees covered by Art. 12 of the Constitution the dynamic role of
Art. 14 and other relevant Articles like 21 must be allowed to have fuli A
play without any inhibition, unless the statutory rules themselves, ccin-
sistent with the mandate of Arts. 14, 16, 19 & 21 provide, expressly .
such an exception. ·

Article 19( l)(g) empoWers every citizen right to avocation or · B
profession etc., which includes right to be continued in employment
under the State unless the tenure is validly terminated consistent with
the scheme enshrined in the fundamental rights of the Constitution.
Therefore, if any procedure is provided for deprivation of the right to
employment or right to the continued employment till tiie age of
superannuation aS iS a source to right to livelihood, such a procedure
must be just, fafr and reasonable. This Court in Fertilizer Corporation C
Kamgar Union (Regd.), Sindri & Ors. v. Union of India & Ors., [19811
2 SCR 52 at 60-61 held that Art. 19(1)(g) confers a broad and general
right which is available to all persons to do works of any particular
kind and of their choice. Therefore, whenever there is arbitrariness in
state· action-whether it be of the legislature or of the Executive or of D
an authorlty under Art. 12, Arts. 14 and 21 spring into action and
strikes down such an action. The concept of reasonableness and non,
arbitrariness pervades the entfre constitutional spectrum and is a
golden thread which runs through the whole fabric of the Constitution.
Therefore, the provision of the statute, the regulation or the rule
which empowers an employer to terminate the services of an employee E
whose service is of an indefinite period till he attains the age of
superannuation, by serving a notice of pay in lieu thereof must be
conformable to the mandates of Arts. 14, 19( l)(g) and 21 of the Con-
sthuiion. Otherwise per se it would be void. In Motiram Deka's case,
Gajendragadkhar; J., (as he then was) after invalidating the rules
149(3) and 148(3) under Art. 311(2) which impari materia Rule 9(b) of F
the Regulation also considered their validity in the light of Art. 14 and
held thus: •

"Therefore, we are satisfied that the challenge to the vali-
dity of the impugned Rules on the ground that they con-
travene Art. 14 must also succ~ed." G

This was on the test. ~f reasonabledassificatio~ as the principle then
was applied. Subba Rao, J., (as he-then was) in a separate but concur-
rent judgment, apart from invalidating the rule under Article 311(2)
also held that 'the Rule infringed Article 14 as well, though there is no •
elaborate discus~ion in· that regar_d .. But, Das_ Gupta, J;;considered H.
316 SUPREME COURT REPORTS [1990) Supp. 1 S.C.R.

elaborately on this aspect and held:
A
"Applying the principle laid down in the above case to the
present rule, I find on the scrutiny of the Rule that it does
not lay down any principle or policy for guiding the exer-
cise of discretion by the authority who will terminate the
B service in the mailer of selection or classification. Arbi-
trary and uncontrolled power is left in the authority to
select at its will any person against whom action will be
taken. The Rule, thus enables the authority concerned to
discriminate between two railway servants to both of whom
R. 148(3) equally applied by taking action in one case and
not taking it in the other. In the exercise of the discretion
c by the authority the rule has therefore to be struck down as
contravening the requirements of Art. 14 of the Constitution."

32. Even in Tulsiram Patel's case (supra) this Court declared
that it must satisfy the test of justness, fairness and reasonableness of
D the procedure prescribed. But the proviso to Art. 311(2) was upheld
for the reason that the Constitution itself made proviso-an exception
to the princ.iple of audi alteram partem engrafted in Art. 311(2) of the
Cohstitution. As a fact, it expressed thus:

"As the making of such laws and the framing of such rules
E are subject to the provisions of the Constitution, if any such
act or rules violates any of the provisions of the Constitu-
tion, it would be void. Thus, as held in Moti Ram Deka's
case AIR 1964 SC 600 if any such act or rule trespasses on
the rights guaranteed to government servants by Art. 311,
it would be void. Similarly, such acts and rules cannot
., F abridge or restrict the pleasure of the President or the
Governor of a State exercisable under Art. 310(1) further
than what the Constitution has expressly done. In the same
way, such Act or rule would be void if it violates any funda-
mental right guaranteed by part III of the Constitution."

·G Gurdev Singh 's case declares the rules that empowered to
order compulsory retirement of the Government employee after put-
ting ten years of service as ultra vires. In S.S. Muley v. J.R.D. Tata,
[ 1979] 2 SLR 438 (Bombay) my learned brother Sawant, J. (as he then
was) held that Regulation 48 which empowered the employer uncana-
lised, unrestricted and arbitrary power to terminate the service of an
H employee with notice or pay in lieu thereof without any opportunity of
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.I . . 317

hearing as violative of principles ofnatural justice under Art. 14 of the
Constitution. . ~

In Superintendent of Post Office v. K. Vasayya, [ 1984] 3 Anc:lhr.a
)',radesh Law Journal 9 the respondent Vasayya was denied .of !he
.. appointment as a Clerk on the ground that the Confidential Reports
submitted by the Police disclosed adverse. comments .on the conduct of ~
... the respondent. When the appointment was denied on that basis it was

... held that thoµgh the selection to a public office is .a privilege anc:I no
vested right· has been accrued till the candidate is appointed. in the
· context of.fair play in action subsetving the mandate of Art. 14 held at
p. 45 thus:

"Often times, convenience and justice ar.e not on speaking ~
terms. It is the actlrnl ac:lministration of law and ·not only
the manner in which it is done that reflects the actio.n 0 f the
State in assuring the equal protection to a c;itizen. In adapt-
ing the procedure, as held by Frankfurther, J. in Jo.ini A.nti
Facist Refugee Commission v. Mc: Grath, 341 US 1~3 t~at .a ,9
conclusion satisfie.s one's private conscience do!'s not attest
its r"lial:>ility. The validity and moral authority .of a ~one!µ,
sion largely depends on the mode by whic.h it w.as rl'acll<;d.
Secrecy is not congenial to truth. S!'eking and self-righ.t-
eousness gives too slander an .assurance of rightness. No
belt.er instrument has b.een devised for arriving .at the t!'llth JO
that) to give a person iP je.opar!fy pf .a s.erious l.oss, .a n.O(ig:
of t)le case against him and an .Opportuni(y to .mee( it, ·nPF
· has a better way been founc:I f!Ji gener.ating the fee)iµg s9
impor(ant t() a popµlar Govepnne!l( that jl)stjce pas 1b,e!'n
cjone." · ·

Bradley, J. in Unifed States v. Samuel D. single(on, ;[l.9811 !09
US 3 has held that:

"No State shall make or enforce any law ~fo~h abrogat.e
the privileges or immunities of citizens .of t))e Onite.d
States." g
InRqmana's case (supra), it has been neld that:

''It is indeed unthinkable that in a !femp~r~cy gpY@ffi~d bY
the rule of law, the executive Gpvt: or any of its Pffif1Jrn
should possess arbitrary Po\V~r oy_er th~. int.,rnsts Pf !h@ H
individual .....
318 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

.The procedure adopted Should match with what justice
A
demands. History shows that it is always subtle and insi-
dious encroachments made ostensibly for a good cause that
imperceptibly but surely erode the foundations of liberty."

Doughlas, J. in Joint Anti Facist Refugee Commission's case
B (supra) held that:

'This is a Government of laws not of men. The powers
being used are the powe~s of the Government over the
reputation and fortunes of citizens. In situations far less
severe or important than those a party is told the nature of
the charge against him."
c
Harry W. Jones in his "Rule of law and Welfare State", 1958
Columbia Law Review, 143 at 146 stated that: .•

"What is needed then is to make the welfare state itself a
D source of new "rights" and to surround the "rights" in
public benefaction with legal safeguards both Jll=OCedural
and substantive comparable to those enjoyed by the tradi-
tional right of property in our law."

Accordingly it was held that prior opportunity of hearing
E before denying appointment is a mandate of Art. 14 of the
Constitution. ··

In West Bengal Electricity Board & Ors. v. D.B. Ghosh & Ors.,
[ 1985] 2 SCR 1014 in similar circumstances, it was held that the regula-
tion as "Herry Vlllth Clause as ultra vires of Art. 14 of the Constitu-
F tion. The same principle was reiterated in Brojonath's case.

In Workman of Hindustan Steel Ltd. & Anr. v. Hindustan Steel •·
Ltd. & Ors., [ 1985] 2 SCR 428 the standing order that empowers the
manager to dispense with the enquiry and to dismiss an employee
without any obligation to record reasons was held to be drastic power
G but directed to amend the standing orpers consistent with proviso to
Art. 311(2) of the Constitution. This Court in 0. P. Bhandari v. Indian
Tourism Development Corpn. Ltd. & ..Ors., [1986] 4 SCC 337 struck
down the similar rule on the same doctrine of 'hire and fire' and that it
is impermissible under the constitution of the scheme to sustain the
doctrine of 'hire and fire'. In Chandrabhan's case, Rule 15(1)(ii)(b) of
H Bombay Service RUie was held to be void. In A.P.S.R. T. Corpn. v.
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.] 319

Labour Court, AIR (1980) A.P. 132 a Full Bench ofAndhra Pradesh
High Court held that the legislature is not competent to make law A
abridging the right to work.

In R.M.D. Chamarbaugwal/a v. State of Punjab, [1957] SCR 930
it was held that any Act violating fundamental rights is void. In
Kanhialal v. District Judge & Ors., [1983] 3 SCC 32 this Court held B
that termination of the service of a temporary employee without
affording opportunity is penal in character and violates Art. 311(2)
and was void. In M.K. Agarwal v. Gurgaon Gramin Bank & Ors.,
[1987] Suppl. SCC. 643 this Court struck down regulation 10(2)(a) of
the Gurgaon Gram in Bank (Staff) Services Rules, 1980. In this light it
is not open to the State to contend that "look here; though Constitu-
tion en joins and admonishes us saying that it is no longer open to the · C
State to make law or rule violating the rights created under Arts. 14
and 21, the citizen, with a view to secure public employment from us
had contracted out of the constitutional rights and agreed to abide by
rules including the termination of his/her services at any time at our
will without notice or opportunity even for misconduct, negligence, D
inefficiency, corruption or rarik nepotism_, so we are free to im_pose the
said punishment." Even in the case of minority institutions, when the
employees are dismissed on the principle of hire and fire, this Court
held it to be impermissible vide All Saints High School v. Government
of A. P., I1980] 2 SCR 924 & 938 e to f; Frank Anthoney Public School
v. Union of India, [ 1987] 1 SCR 238 & 269 b to e; Christian Medical E
College Hospital Employees' Union & Anr. v. Christian Medical
College, Ve/lore Association & Ors., [1988] 1SCR546 & 562.

In Moti Ram Deka's case this Court held that rules 148(3) and
149(3) trespassed upon the. rights guaranteed to government servants
by Art. 311(2) and would be void. f

In Kameshwar Prasad v. State of Bihar, [1962] Suppl. 3 SCR 369.
Rule 4A of the Bihar Government Servants' Conduct Rules, 1956, in
so far as it prohibited any form of demonstration was struck down by
this Court as being violative of sub-clauses (a) and (b) of clause. (1) of
Art. 19. In 0.K. Ghosh v. EZX Joseph, [1963] Suppl. 1 SCR 789 this G
Court struck down Rule 4A of the Central Civil Services (Conduct
Rules), 1955, on the ground that it violated sub-clause (c) of clause (1)
of Art. 19 of the Constitution and· that portion of Rule 4A which
prohibited participation in any demonstration as being violative of
sub-clauses (a) and (b) of clause (1) of Article 19. It must, therefore,
be hold that any act or provision therein, Rules or Regulations or H
320 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R. .

A instructions having statutory force violating fundamental rights under
·Articles 14, 16(1), 19(1)(g)and2larevoid.

33. Thus it could be hold that Art. 14 read with 16(1) accords
fight to ari equality or an equal treatment consistent with the principles
of riatural justice. Any law made or action taken by the employer,
cdrporate s!atutory or instrumentality under Article 12 must act fairly,
justly ahd reasonably. Right to fair treatment is an essential inbuilt of
tiatural justice. Exercise of unbridled and uncanalised discretionary
power iinpihges upon the right of the citizen; vesting of discretion is no .
wrong provided it is exercised purposively judiciously and without
prejtidice, Wider the discretion, the greater the chances of abuse.
Al:lsoiute discretion is destructive of freedom than of man's other
inventions. Absolute discretion marks the beginning of the end of the
liberty. T~e conferment of absolute power to dism.iss a permanent
employee is antithesis to justness or fair treatment. The exercise of
discretionary power wide of mark would bread arbitrary, unreason-
able or unfair actions ahd would not be consistent with. reason and
justice. The provisions of a statute, regulations or rules that empower
an employer or the ·management to dismiss, remove or reduce in rank
of ah employee, must be consistent with just, reasonable and fair
procedure. lt would, further, be held that right to public employment
which includes right to continued public emplo_yment till the employee
is superannuated as per rules or compulsorily retired or duly ter-
minated ih accordance with the procedure established by law is an
integral part of right to iivelihood which in tum is an integral facet of
tight to life assufed by Art. 21 of the Constitution. Any procedure
prescribed io deprive such a right to livelihood or continued employ-
ment must l:le just, fair and reasonable procedure. In other words an
ein.ployee iri a public employment also must not be arbitrarily unjustly
arid unreasonably be deprived of his/her livelihood which is ensured in
continued employment till it is terminated in accordance with just, fair
ahd reasonable procedure. Otherwise any Jaw or rule in violation
thereof is void.
•.
Need for harmony between social interest and individual right

34. Uridoubtedly efficiency of the administration and the disci-
pline ahidhg the employees is very vital to the successful functioning of
!Iii iris!itu!iori cir maximum production of goods or proper maintenance
of the serVices. Discipline iri that regard among the employees is its
essential facet arid has to be maintained. The society is vitally interes-
.
ted iii the tltie discharge of the duiies by the government employees ot
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.] 321

employee.s of corporate bodi~s or statutory authorities or irisfrumenta·
A
lities under Art. 12 of the Constitution, As· held in Tulsiram Patel's
case the _public are vitally interested in the efficiency and integrity of.
the public service. The government or corporate employees ate, after-
all, paid from the public. exchequer to which everyone contributes
either by way of direct or .indirect taxes. The employees are charged
with public duty and they should perform their public duties with deep B
sense of-responsibility. The collective responsibility of all the officers.
from top most to the lowest maximises the efficient public administra-
tion. They must, therefore, be held to have individual as well as collec-
tive responsib_ility iii discharge of their duties faithfully, honestly with
full dedication and utmost devotion
. . .
to duty for the . progress of the
country. Equally the employees must also have a feeling that they have
security of tenure. They should also have an involvement on their part
in the organisation or Institution, corporation, etc. They need assu-
rance of service and they need protection. The public interest and the
public good demand, that those who discharge their duties honestly,
efficiently a_nd with a sense of devotion and dedication to duty should
receive adequate protection and security of ienure. Equally. ineffi- D
cient, dishonest and corrupt or wlio became security risk should be
weeded out so thai suci:es•fUl functioning of the industry or manufac-
ture of the goods or rendering or services would be available at the
maximurii.Jevelto the society and society thereby receives optimum
benefit from the public money expanded on them as salary and other
perks. Therefqre, when a situation envisaged under statute or statu- E'
tory rule or regulation or instructions having statutory force to remove
or dismiss an employee the question arises whether they need at least
minimum protection of fair play in action.

34A. In Vasayya's case when a similar contention was raised I
have stated at p. 47 in Para 130 & 131 that. F

The Audi alteram partem rule must be flexible; malleable and an
adaptable concept to adjust and harmonise the need for speed and
obligation to act fairly. When the rights of the Government are widely
stressed, the rights of the person are often threatened, when the latter
are ever. emphasised Government becomes weak to keep order. G
Therefore, the rule can be tailored and.the measure of its application
cut sport in reasonable proportion to the exigencies of the situation.
The"administrative agency can develop a technique of decision worthy
of being called "ethos of adjudication". Meaningful statutory stan-
dards, realistic procedural requirements and discriminatory techniques
of judicial review are among the tools to control the discretionary H
322 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A power. It makes no difference whether the occasion for the exercise of
power is personal default or act of policy. Good administration
demands fair consultation in each case and this the law can and should
enforce. The insistence of the observance of fundamental fairness in
the procedure becomes a balancing balm to alleviate apprehension of
B arbitrary decision by the executive Government while assuring oppor-
tunity to disabuse the prima facie impression formed against the
person to usher in a era· of largest good io largest number of people
with proper checks and balances between needs of the State and the
rights of the individual. The brooding omnibenevolence and omnicom-
petency of the need for expediency and claim for justness interplay
ethos of fair adjudication in action.
c
34B. Therefore, it is no well tuned solace to say that in a court of
law at the fag end of the currier or after superannuation in the inter-
regnum which often over takes the litigation, that the employee would
be meted out with justice (a grave uncertainty and exposing to frustrat-
ing procrastination of judicial process and expenses and social humilia-
D
tion). Before depriving an employee of the means of livelihood to
himself and his dependents, i.e. job, the procedure prescribed for such
deprivation must, therefore, be just, fair and reasonable under Arts.
21 and 14 and when infringes Art. 19(1)(g) must be subject to imposing
reasonable restrictions under Art. 19(5). Conferment of power on a
high rank officer is not always an assurfoce, in particular when the
E
moral standards are generally degenerated that the power would be
exercised objectively, reasonably, conscientiously, fairly and justly
without inbuilt protection to an employee. Even officers who do their
duty honestly and conscientiously are subject to great pressures and
pulls. Therefore, the competing claims of the "public interest" as
against "individual interest" of the employees are to be harmoniously
F
blended so as to serve the societal need consistent with the constitu-
tional scheme.

Statutory Construction:

35. Statutory construction raises a presumption that an Act or a
G
provision therein a constitutionally valid unless it appears to be ultra
vi res or invalid. The legislature, subject to the provisions ofthe Con-
stitution, has undoubtedly unlimited powers to make law. In fairness
to the learned Attorney General, he agrees that the impugned provi-
sions are per se invalid. But he attempted to salvage them by resorting
H to the doctrine of reading down.
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.] 323

Reading a provision down whenpermissible.
A
The question emerges whether the doctrine of reading down
would be applied to avoid a void law vesting with arbitrary power with
a naked hire and fire draconian rule. It is difficult to give acceptance to
extreme contention raised by Sri Garg and Sri Rama Murthy that the
Courts cannot in the process of interpretation of the Statute would not B
make law but leave it to the legislature for necessary amendments. In
an appropriate case Judges would articulate the inarticulate major
premise and would give life and force to a Statute by reading har-
moniously all the provisions ironing out the creezes. But the object is
to alongate the purpose of the Act. In this regard I respectfully agree
with my learned brother, my Lord the Chief Justice, on the principle of
statutory construction. The question is whether Legislature intended c
to confer absolute power or would it be construed in such a way that
would supplant the law but not supplement law made by the Legislature.

35A. Natural construction.
D
The golden rule of statutory construction is that the words and
phrases or sentences should be construed according to the intent of
legislature that passed the Act. All the. provisions should be read
together. If the words of the statutes are in themselves precise and
unam_biguous, the words, or phrases or sentences themselves alone
do, then no more can be necessary than to expound those words or E
phrases or sentences in their natural and ordinary sense. But if any
doubt arises from the terms employed by the legislature, it has always
been held a safe means of collecting the intention, to call in aid the ,I,
ground and cause of making the statute, and to have the recourse to /I I
the preamble, which is a key to open the minds of the makers of the I [
statute and the mischiefs which the Act intend to redress. In determin- F
ing the meaning of statute the first question to ask always is what is the.
natural or ordinary meaning of that word or phrase in its context. It is
only when that meaning leads to some result which cannot reasonably
be supposed to have been the intent of the legislature then it is proper
to look for some other possible meaning then the court cannot go
~~- G
35. Craie's Statute Law, Seventh Edition in Chapter 5, at page
64 it is stated that where the words of an Act are clear, there is no need
for applying any of the principles of interpretation which are merely
presumptions in cases of ambiguity in the statute. The safer and more
correct course of dealin_g with the question of construction is to take H
324 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R.

the words themselves and arrive, if possible, at their meaning without
A
in the first place refer to cases. Where an ambiguity arises to supposed
intention of the legislature, one of the statutory constructions, the
court profounded is the doctrine of reading down. Lord Reid in
Federal Steam Navigation Co. v. Department of Trade and Industry,
I 1974] 2 All E.R. 97 at p. 100 (as also extracted by Cross Statutory
B Interpretation, Butterworths' Edition, 1976 at page 43 in preposition
3) has stated thus:

"the judge may read in words which he considers to be
necessarily implied by words which are already in the
statute and he has a limited power to add to, alter or ignore
statutory words in order to prevent a provision from being
c unintel,ligible, absured or totally unreasonable, unwork-
able, or totally irre-concileable with the rest of the statute."

At page 92 of the Cross Statutory Interpretation, the author has
stated that "The power to add to, alter or ignore statutory words is an
D extremely limited one. Generally speaking it can only be exercised
where there has been a demonstrable mistake on the part of the
draftsman or where the consequence of applying the words in their
ordinary, oi discernible secondary, meaning would be utterly un-
reasonable. Even then the mistake may be thought to be beyond cor-
rection by the court, or the tenor of the statute may be such as to
E preclude the addition of words to avoid an unreasonable result."
Therefore, the Doctrine of Reading Down is an internal aid to con-
strue the word or phrase in statute to give reasonable meaning, but not
to detract distort or emasculate the language so as to give the supposed
purpose to avoid unconstitutionality

F 35C. This Court in Saints High School, Hyderabad v. Govt. of
A. P., [ 1980] 2 SCR 924 held that:

"this Court has in several cases adopted the reading down
the provisions of the Statute. The· reading down of a provi-
sion of a statute puts into operation the principle that so far
G as is reasonably possible to do so, the legislation should be
construed as being within its power. It is the principle effect
that where an Act is expressed in language of a generality
which makes it capable, if read literally, of applying to
matters beyond relevant legislative power, the Court would
construe it in a more limited sense so as to keep it within
H the power."
D.T.C. v. D.T.C. MAZDOOR CONGRESS IK. RAMASWAMY, .I.] 325

Similarly restricted meaning was ascribed by Maxwell in his Interpre- A
tation of the Statutes XII Edn. at p. 109 under the caption "Restriction
of operation" that sometimes to keep the Act within the limits of its ·
scope and not to disturb the existing Jaw beyond what the object
requires, it is construed as operative between certain purposes cnly
even though the language expresses no such circumspection of field
of operation. B

36. It is, thus, clear that the object of reading down is to keep
the operation of the statute within the purpose of the Act and consitu-
ti0nally valid. In this regard it is equally of necessity to remind
ourselves ·as held by this Court in Minerva Mills' case that when the
effect of Art. 31 was asked to be read down so as to save it from
unconstitutionality this Court held that it is not permissible to read c
down the statutory provisions when the avowed purpose is to confer
power on an authority without any limitation whatever and that at
p. 259D and Git was held that the principle of reading down cannot be
used to disto'rt when words of width are used even advertantly. In
Elliott Ashton Welsh, II v. United States, 398 U.S. 333 (26 Lawyer's D
Edition 2nd, 308 at 327) Herlan, J. at 327 held that "when the plain
thrust of a legislative enactment can only be circumvented by distor-
tion to aver_t constitutional collision, it can only by exalting form over
substance that one can justify veering of the path that has been plainly
marked by the Statute. Such a course betrays extreme skepticism as to
constitutionality and in this instance relfects a ·groping to preserve E
conscientious objecter exemption at all costs I cannot subscribe wholly
to emasculated construction of a statute to avoid facing constitutional
question in purported fidality to the statutory doctrine of avoiding
unnecessary resolution of constitutional issues."

36A. In Nalinakhya Bysack v. Shyam Sunder Haldar & Ors., F
[ 1953] SCR 533 at 544-45 this Court has refused to rewrite legislation
to make up omissions of the Legislature.

In Moti Ram Deka's case when Rule 148(3) and Rule 149(3) of
the Railway Establishment Code were sought to be sustained on the _
'principle of reading down', this court held thus: G

,fThere is one more point which still remains to· be con-
sidered and that is the point of construction. The learned
Addi. Solicitor General argued that in construing the impugned
R. 148(3) as well as R. 149(3), we ought to take into
account the fact that the Rule as amended has been so H
326 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R.

framed as to avoid conflict with or non-compliance of, the
A
provisions of Art. 311(2), and so, he suggests that we
should adopt that interpretation of the Rule which would
be consistent with Art. 311(2). The argument is that the
termination of services permissible under the impugned
rules really proceeds on administrative grounds or consi-
B derations of exigencies of service. If, for instance, the post
held by a permanent servant is abolished, ur the whole of
the cadre to which the post belonged is brought to an end
and the railway servant's services are terminated in conse-
quence, that cannot amount his removal because the termi-
nation of his service is not based on any consideration
personal to the servant. In support of this argument, the
c Addi. Solicitor General wants us to test the prov-ision con-
tained in the latter portion of the impugned rules. We are
not impressed by this argument. What are not impressed by
this argument. What the latter portion of the impugned
Rules provide is that in case a railway servant is dealt with
D under that portion, no notice need be served on him. The
first part of the Rules can reasonably and legitimately take
in all cases and may be used even in respect of cases falling
under the latter category, provided, of cour~e, notice for
the specified period or salary in lieu of such notice is given
to the railway servant. There is no doubt that on a fair
E construction, the impugned Rules authorise the Railway
Administration to terminate the services of all the per-
manent servants to whom the Rules apply merely on giving
notice for the specified period or on payment of salary in
lieu thereof and that clearly amounts to the removal of
the servant in question. Therefore, we are satisfied that the
F impugned rules are invalid inasmuch as they are inconsis-
tent with the provisions contained in Art. 311(2). The
termination of the permanent servant's tenure which is
authorised by the said Rules is no more and no less than
their removal from service, and so, Art. 311(2) must come
into play in respect of such cases. That being so, the Rule
G which does not require compliance with the procedure pre-
' scribed by Art. 311(2) must be struck down as invalid."

37. I am, therefore, inclined to hold that the Courts though,
have no power to amend the law by process of interpretation, but do
have power to mend it so as to be in confirmity with the intendment of
H the legislature. Doctrine of reading down is one of the principles of
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.J 327

interpretation of statute in that process. But when the offending A
language used by the legislature is clear, precise and unambiguous,
violating the relevant provisions in the constitution, resort cannot be
had to the doctrine of reading down to blow life into the void law to
save from unconstitutionality or to confer jurisdiction on the legisla-
ture. Similarly it cannot be taken aid of to emasculate the precise,
explicit, clear and unambiguous language to confer arbitrary, unbrid- B
led and uncanalised power on an employer which is a negation to just,
fair and reasonable procedure envisaged under Articles 14 and 21 of
the Constitution and to direct the authorities to record reasons,
unknown or unintended procedure, in the manner argued by the
learned counsel for the appellants.

38. At the cost .of repetition it is to reiterate that when the C
authority intends to take disciplinary action for imposing penalty of
dismissal, removal or reduction in rank of an employee, an elaborate
procedure has been provided in Regulation 15 to conduct an enquiry
into misconduct after giving reasonable opportunity. Residuary power
has been avowedly conferred in Regulation 9(b) with wide discretion D
on the appropriate authority to take actions on similar set of facts but
without any guidelines or procedure at the absolute discretion of the
.same authority. The language of Regulation 9(b) is not capable of two
interpretations. This power appears to be in addition to the normal
power in Regul'l!ion 15. Thereby the legislative intention is manifest
that it intended to confer such draconian power couched in language of E
width which hangs like Damocles sword on the neck of the employee,
keeping every employee on tenterhook under constant pressure of
uncertainty, precarious tenure at all times right from the date of
appointment till date of superannuation. It equally enables the emp-
loyer to pick and choose an employee at whim or vagary to terminate
the service arbitrarily and capriciously. F

1! 39. Regulation 9(b), thereby deliberately conferred wide power
of termination of services of the employee without following the
principle of audi alteram partem or even modictim of procedure of
representation before terminating the services of permanent empl07'
yee. It is well settled rule of statutory construction that when tw<J G
interpretations are possible one which would preserve and save con-
stitutionality of a particular Statute, would be preferred to the other
that would render it unconstitutional and void. When the language is
clear, unambiguous and specific and it does not lead to the construc-
tions, it is not permissible to read into those provisions something
which is not intended. It is undoubtedly true as rightly contended by H
328 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A Mr. Ashok Desai, the learned Solicitor General that the power to take
appropriate and expeditious action to meet the exigencies of weeding
out inefficient, corrupt, indolent officers or employees from service
should be provided and preserved to the competent authority. Any
action taken without any modicum of reasonable procedure and prior
opportunity always generates an unquenchable feeling that unfair
B treatment was meted out to the aggrieved employee. To prevent mis-
carriage of justice or to arrest a nursing grievance that arbitrary,
whimsical or capricious ·action was taken behind the back of an
employee without opportunity, the law must provide a fair, just and
reasonable . procedure as is exigible in a given circumstances as
adumbrated in proviso to Art. 311(2) of the Constitution. If an indi-
vidual action is taken as per the procedure on its own facts its legality
c may be tested. But it would be no justification to confer power with
wide discretion on any authority without any procedure which would
not meet the test of justness, fairness and reasonableness envisaged
under Arts. 14 and 21 of the Constitution. In this context it is
important to emphasise that the absence of arbitrary power is the first
D essential of the rule of law upon which our whole constitutional system
is based. In a system governed by rule of law. discretion, when confer-
red upon executive a11thorities, must be confined within defined limits.
The rule of law from this point of view means that decisions should be
made by the application of known principles and rules and, in general,
s11ch decisions should be predictable and the citizen sfwuld know where
E he is. If a decision is taken without any principle or without any rule it
is unpredictable and such a decision is the antithesis of a decision taken
in accordance with the rule of law. (See Dicey-"Law of the Consti-
tution"-lOth Edn., Introduction ex). "Law has reached its finest
'
moments", stated Douglas, J. in United States v. Wunderlick, 342 U.S.
98 "when it has freed man from the unlimited discretion of some ruler
F .......... where discretion is absolute, man has always suffered". It
is in this sense that the rule of law may be said to be the sworn enemy
of caprice. Discretion, as Lord Mansfield stated it in classic terms in
the case of John Wilkes "means should discretion guided by law. It
must be governed by rule, not by humour; it must not be arbitrary,
vague and fanciful," as followed in this Court in S.G. Jaisinghani v.
G Union of India., [1967] 2 SCR 703.

40. Iri an appropriate case where there is no sufficient evidence
available to inflict by way of disciplinary measure, penalty of dismissal
or removal from service and to meet such a situation,·it is not as if that
1
the authority is lacking any power to make Rules or'n'i'g ulations to give
H a notice of opportunity witli ihe grounds or the material on records on
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY, J.] 329

which it proposed to take action, consider the objections and record
A
reasons on the basis of which it had taken action and communicate the
same. However scanty the material may be, it must form foundation.
This minimal procedure should be made part of the procedure lest the
exercise of the power is capable of abuse for good as well as for
whimsical or capricious purposes for reasons best known to the autho-
rity and not germane for the purpose for which the power was confer- B
red. The action based on recording reasoning without communication
would always be viewed with suspicion. Therefore, I hold that confer-
ment of power with wide discretion without any guidelines, without
any just, fair or reasonable procedure is constitutionally anathema to
Arts. 14, 16(1), 19(1)(g) and 21 of the Constitution. Doctrine of read-
ing down cannot be extended to such a situation.
c
41. It is undoubted that in In re Hindu Women's Right to Pro-
perty Act, [1941] FCR 12 .involve the interpretation of single word
"property" in the context.to legislative compe\ency but that cannot be
extended to the facts of these cases. R.M.D. Chamarbaugwalla's case is
of severability and of a single word competition. The interpretation D
therein also cannot be extended to the fact' of these cases. Even the
case of K.N. Singh v. State of Bihar, [1962] Suppl. 2 SCR 769 involve
interpretation of Section 124(A) I.P.C. in the context of freedom of
speech enshrined under Art. 19(1)(a) of the Constitution. The inter-
pretation was put as to subserve the freedom under Art. 19(1)(a). R.L.
Arora v. State of U.P., [1964] 6 SCR 784 does not involve of the E
doctrine of reading down so as to cut down the scope of Fundamental
•
Right. Similarly Jagdish Pandey v. Chancellor of the Bihar, [1969] 1
SCR 231 also does not concern with application of doctrine of reading
down so as to sacrifice the principle of natural justice which are con-
sidered as essential part of rule of law. In Amritsar Municipality v.
State of Punjab, [1969] 3 SCR 447 the court ascertained the intention F
of the Legislature and interpreted the Act consistent with the said
intention. Sunil -Batra v. Delhi Admn., [1978] 4 SCC 494 is also a
decision where it was found that the intention of the Legislature was
not to confer arbitrary power. N.C. Da/wadi v. State of Gujarat, [1987]
3 sec 611 is also a case giving reasonable interpretation of the inten-
tion of the provisions of the.Statute and is not capable of the meaning. G
In Charania/ Sahu v. Union of india, [1989] Suppl. Scale (1) at p. 61 ori
which. strong reliance was placed by both the le.arned Attorney
General and Solicitor General, is a case capable of two inter!Jretations
to Sec. 4.

The decisions cited by Shri Ashok Desai i.e. Delhi Transport H
330 SUPREME COURT REPORTS [ 1990) Supp. 1 S.C.R.

A Undertaking v. Balbir Saran Goel, [1970) 3 SCR 757; Air India Corpo-
ration v. Rebel/ow, [1972) 3 SCR 606; Municipal Corporation of Grea-
ter Bombay v. P.S. Malvankar, [1978) 3 SCR 1000 concern the indust-
rial law wherein the validity of rules on the touch-stone of the reason-
ableness, fairness or justness was not considered. The prevailing
doctrine of reasonable classification and nexus had their play lo up-
B hold the validity of the provisions.

42. It is undoubtedly true as contended by Sri Bhasin, learned
counsel for the intervener, that it is open to the authorities to ter-
minate the services of a temporary employee without holding an
enquiry. But in view of the match of law made, viz., that it is not the
form of the action but the substance of the order is to be looked into, it
c is open to the Court to lift the veil and pierce the impugned action to
find whether the impugned action is the foundation to impose punish-
ment or is only a motive. A larger Bench of seven Judges of this Court
in Shamsher Singh v. State of Punjab, [1975) 4 SCR 814 elaborately
considered the question and laid down the rule in this regard. The play
D of fair play is to secure justice procedural as well as subsrantive. The
substance of the order, the effect thereof is to be looked into. Whether
no misconduct spurns the action or whether the services of a pro-
bationer is terminated without imputation of misconduct is the test.
Termination simpliciter, either due to loss of confidence or unsuitabi-
lity to the post may be a relevant factor to terminate the services of a Ii/;;
E probationer. But it must be hedged with a bona-fide over-all consi- (
deration of the previous conduct without tained with either ma/a-fide .1
or colourable exercise of power or for extraneous considerations. Such
actions were upheld by this Court. The action must be done honestly
with due care and prudence.

F 43. In view of the march of law made by Art. 14, in particular
after Maneka Gandhi's case, it is too late in the day to contend that the
competent authority would be vested with wide discretionary power
without any proper guidelines or the procedure. The further conten-
tion that the preamble, the other rules and the circumstances could be
taken aid of in reading down the provisions of the impugned rules or
G the regulations is also of no assistance when it is found that the legisla-
. tive intention is unmistakably clear, unambiguous and specific. Thus
considered, I have no hesitation to conclude that the impugned regula-
tion 9(b) of the Regulations are arbitrary, unjust, unfair and unreason-
able offending Arts. 14, 16( !}, 19(l}(g) and 21 of the Constitution. It is
also opposite to the public policy and thereby is void under Section 23
H of the Indian Contract Act.
D.T.C. v. D.T.C. MAZDOOR CONGRESS [K. RAMASWAMY. J.i 331

44. It is made clear that, as suggested by this Court in Hindustan A
Steel Case that it is for concerned to make appropriate rules or regula-
tions and to take appropriate action even without resorting to elabo-
rate enquiry needed consistent with the constitutional scheme. The
correctness of the decision in Tulsiram Patel's case though was
doubted in Ram Chander v. Union of India, [1986) 2 SCR 980 it is
unnecessary to go into that question. For the purpose of this case it is
B
sufficient to hold that proviso to Art. 311(2) itself is a constitutional
provision which excluded the applicability of Art. 311(2) as an excep-
tion for stated grounds. It must be remembered that the authority
taking action under either of the clauses (b) or (c) to proviso are
en joined to record reasons, though the reasons are not subject to
judicial scrutiny, but to find the basis of which or the ground on which c
or the circumstances under which they are satisfied to resort to the
exercise of the power under either of the two relevant clauses to pro-
viso to Art. 311(2) of the Constitution. Recording reasons itself is a
safeguard for preventing to take arbitrary or unjust action. That ratio
cannot be made applicable to the statutory rules.
D
45. Accordingly I. hold that the ratio in Brojonath's ·case was
correctly laid and requires no reconsideration and the cases are to be
decided in the light of the law laid above. From the light shed by the
path I tread, I express my deep regrets for my illability td agree with
my learned brother, the Hon'ble Chief Justice on the applicability of
the doctrine of reading down to sustain the offending provisions. I E
agree with my brothren B.C. Ray and P.B. Sawant, JJ. with their
reasoning and conclusions in addition to what I have laid earlier.

46. The appeal is accordingly dismissed; but without costs. Simi-
larly Civil Appeal No. 1115 of 1976 is allowed and the monetary relief
granted is reasonable, but parties are directed to bear their own costs. F
Rest of the matters will be disposed of by the Division Bench in the
light of the above law.

In view of the majority judgment, Civil Appeal No. 2876 of 1986
(Delhi Transport Corporation v. D. T. C. Mazdoor Congress) is dismis-
sed. Civil Appeal No ..1115 of 1976 (Satnam Singh v. Zilla Parishad G
Ferozepur & Anr., is allowed and the other cases shall be placed
before a division bench for final disposal.
N.P.V. C.A. 2876/86is dismissed
& C.A. 1115/76 is allowed.