Holding

Regulation 34 is arbitrary and violative of Article 14, and the appeal is dismissed.

Summary

The West Bengal State Electricity Board terminated a permanent employee under Regulation 34, which allowed dismissal with three months' notice or salary in lieu, without giving any reasons. The employee challenged the termination in a writ petition, and the Calcutta High Court struck down Regulation 34 as arbitrary and violative of Article 14 of the Constitution. The Board appealed, contending that Sections 1A and 19 of the Electricity Supply Act provided sufficient guidelines and that the power was exercised by senior officials. The Supreme Court held that the regulation was a naked "hire and fire" rule, arbitrary, and capable of vicious discrimination, thus violating Article 14. Consequently, the appeal was dismissed, upholding the High Court's decision.

Issues considered

Whether Regulation 34 of the West Bengal State Electricity Board, which permits termination of permanent employees without procedural safeguards, violates Article 14 of the Constitution.
Whether Sections 1A and 19 of the Electricity Supply Act provide adequate guidelines to render Regulation 34 constitutionally valid.

Legislation cited

Electricity (Supply) Acts. 19, s. 1A

Subjects

Article 14Equality before lawArbitrary powerTermination of serviceAdministrative lawEmployment lawWest Bengal State Electricity BoardRegulation 34Natural justice

Judgment

t

WEST BENGAL STATE ELECTRICITY BOARD & ORS.

v. ' .
DESH BANDHU GHOSH AND ORS.

B February 26, 1985

0. Cl!INNAPPA REDDY, E. S. VENKATARAMIAH AND
R. B. MISRA, JJ,

Adminl•tratlre Law-

West Bengal State Electricity Board Reg•latlan" Regulation 34-Regu-
latJ"on conferred full power on employer to terminate services of permanent
employee by serving 3 months notice or salary in lieu thereaf-No guidelines
provided for the exercise of such power-Held, Re1Mlatlon is arbitrary and
offend• Art. 14.
D
First Paragraph of Regulation 34 of West Bengal State Electricity
Board Regulations provides that in case of a permanent employee his services
may be terminated by serving 3 months notice or on payment of salary for
tho corresponding period ia lieu thereof;
E
The Secretary of the appellant-Board terminated the services of first
respondent, a permanent employee with immediate effect on payment of
three months' salary in lieu of three months notice without giving any
reasons under Regulation 34 of the Board's Regulatioos. There was nothing
in the order which could possibly be said to attach any stigma to lhe res~
F pondent. The respondent filed a writ petition in the High Court for
quashing the impugned order. The High Court came to the conclusion that
Regulation 34 was arbitrary in nature and suffered from the vice of enabling
discrirnination and therefore it struck down the first paragraph of Regulation
34 and as a consequence quashed the order terminating the services of the
first respondent.
G
Ia an appeal to this Court, the appellant contended that section !SA
and 19 of the Electricity Supply Act laid down sufficient guidelines for the
r
exercise of the power under Regulation 34 and in any case the power to
terminate tho services of a permanent employee was vested in higher ranking
officials and might be expected to be exercised in a reasonable way and
ll therefore Regulation 34 did not offend Article 14 of the Constitution.
STATE BLECI'IUC!Tl! BOARD v. D. B. GHOSH (Chinnappa Reddy, J.) 1015

Dismissing the appeal, A

HELD : Article 14 has been interpreted in several decisions of this
Cou;t and conrerment and exercise of arbitrary power on and by the State
or its instrumentalities have been frowned upon and struck down by this
Court as offending Article 14. [10170]
l
' B
In the instant case, on the face of it the Regulation is totally arbitrary
and confers on the Board a power which is capable of vicious discrimination.
It is a naked 'hire and fire' rule, the time for banishing which altogether
from employer~employee relationship is fast approaching. Its only parallel
is to be found in the Henry VIII class so familiar to administrative lawyers.
[1017E·F]

Workman, Hindustan Steel Ltd. v. Hindustan Steel Ltd., AIR 1985 SC c
2SI, followed.

S.S. Muley v. J. R. D. Tata and Ors .• [1979) 2 S. L. R. 438,
approved.

Moti Ram Deka v. Nort~ East Frontier Railway, AIR 1964, SC 600, D
referred to.

Manohar P. Kharkhar v. Raghuraj, [1981] II L. L. J. 4S9, overruled.

CIVIL APPE~LATE JURISDICTION: Civil Appeal No. 562 of
1985.
E
From the Judgment and Order dated the 28th January, !985
of the Calcutta High Court in F. M. A. T. No. 970 of 1984.

Somnath Chatterjee, H. K. Puri for the Appellants.
F
S. N. Kacker, A. K. Ganguli for the Respondents.

The Judgment of the Court was delivered by :

CHINNAPPA REDDY, J. Special leave granted.

G
The West Bengal State Electricity Board is the principal appe-
llant in this appeal by special leave which we have just now granted.
The first respondent, a permanent employee of the West Bengal
State Electricity Board, filed the writ petition 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,,Electticity H
1016 SUPRBMI! COURT REPORTS [1985] 2 S.C.R.

A Board terminating his services as Deputy Secretary with immediate
effect on payment of three month's salary in lieu of three month's
notice. The order gave no reasons for terminating the services of
the respondent and there was nothing in the order which could
possibly be said to attach any stigma to the respondent. Apparently

B
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 there-of'. The High Court
contrasted Regulation 34 with Regulation 33 which provides for the
termination of services of both permanent and temporary employees
c of the Board on attaining the age of superannuation, as a result of
the disciplinary action etc. For the sake of convenience we extract
below Regulation 33 and the first paragraph (which alone is relevant)
of Regulation 34 : ..
"33 (I) Unless otherwise specified in the appointment
D order in any particular case, the services of a permanent
employee of the Board may be terminated without notice-
(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
E (ii) as a result of disciplinary action ;

(iii) if he remains absent from duty, on leave or other-
. wise, for a continuous period exceeding 2 years.

(2) In the case of a temporary employee, his service
F may be terminated by serving of-

(a) one month's notice on other side or on payment of
a month's salary in lieu thereof; or

(b) notice on either side for the period specified in the
G appointment order or contract or on payment of salary in
lieu thereof, as the case may be.

(c) the service of a temporary employee shall also be
deemed to have been terminated automatically if the period
of extraordinary leave without pay and/or of unauthorised
absence from duties exceeding(s) a maximum period of
90 days.
STATE BLECTlUCITY BOARD v. D. B. GHOSH (Chinnappa keddy, J.) 101'?

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

Contrasting Regulations ;3 and 34 the High Court came to
the conclusion that Regula!1on 34 was arbitrary in nature and B
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.

The learned counsel for the West Bengal State Electricity c
Board submitted that Regulation 34 did not offend Art. 14 of the
Constitution, that sec. I SA 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 terminate the services
of a permanent employee was vested in higher ranking officials and D
might be expected to be exercised in a reasonable way.

We are not impressed with the submission of the learned
counsel for the Board. On the face of it, the regulation is totally
arbitrary and confers on the Board a power which is capable of
vicious discrimination. It is a naked 'hire and fire' rnle, the time E
for banishing which altogether from employer-employee relationship
is fast approaching. I ts only parallel is to be found in the Henry
VIII class so familiar to administrative lawyers. In Moti Ram Deka
v. Nnrth East Frontier Railway(1 l Rules 148 (3) and 149 (3) of the
Indian Railway Establishment Code were challenged on the ground
that they were contrary to Art. 3!1 (2) of the Constitution. The F
challenge was upheld though no opinion was expressed on the
question whether the rule offended art 14 of the Constitution. Since
then Art. 14 has been interpreted in several decisions of this Court
and conferment and exercise of arbitrary power on and by the State
or its instrumentalities have been frowned upon and s!Juck down
by this court as offending Art. 14. In S. S. Muley v. J. R. D. Tata
G
1
and Ors.( ) P. B. Sawant, J. of the Bombay High Court considered
at great length Regulation 48 (a) of the Air India Employee's Ser-
vice Regulations which conferred similar power on the Corporation

(1) AIR 1964, S.C. 600,
(2) (1979] 2 S.L.R. 438.
1<ns SUPRBMH COURT REPORTS (1985) 2 s.c.R.

A as Regulation 34 confers on the Board in the present case~ The
learned judge struck down Regulation 48 {a) and we agre·e with his
reasoning and ·conclusion. In Workman, Hindustan Steel Ltd. v.
Hindustan Steel Ltd.{ 1 ) this Court bad occasioned to hold that a
Standing Order which conferred such arbitrary, uncanalised and
drastic power to enable the employer to dispense with an inquiry
B j
•
and to dismiss an employee, without assigning any reason, by merely
stating that it was expedient and against the interest of the security
to continue to employ tho workman was violative of the basic
requirement of natural justice.
c: The learned counsel for the appellant relied upon A1anohar
P. Kharkhar v. Raghuraj( 2 ) ·to contend that Regulation 48 of the
Air India Employee's Service Regulations was valid. it is difficult
to agree with the reasoning of the Delhi High Court that because of
the complexities of modern administration and the unpredictable
D exigencies arising in the course of such administrat:on 1t is necessary
for an employer to be vested with such powers as those under
Regulation 48. We prefer the reasoning of Sa want, J. of the Bom-
bay High Court and that of the Calcutta High Court in the judg-
ment under appeal to the reasoning of the Delhi High Court. In
E the result the appeal is dismissed with costs.
•

M.L.A. Appeal d•smissed.

(!) A.I.R. 1985 $.C. 251.
(2) [1981) II L.L.J. 459.