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PETITIONER: NANDGANJ SIHORI SUGAR CO. LTD., RAE BARELI AND ANR.

       Vs.

RESPONDENT: BADRI NATH DIXIT AND ORS.

DATE OF JUDGMENT24/04/1991

BENCH: THOMMEN, T.K. (J) BENCH: THOMMEN, T.K. (J) SHETTY, K.J. (J) YOGESHWAR DAYAL (J)

CITATION:  1991 AIR 1525            1991 SCR  (2) 468  1991 SCC  (3)  54        JT 1991 (2)   338  1991 SCALE  (1)794

ACT:      Specific Relief Act, 1963: Sections 14 and  41-Contract for employment-Whether enforceable against employer-Damages- Whether a ramedy for breach of personal contract.

HEADNOTE:      The  first respondent instituted a suit  for  mandatory injunction  to  enforce  a contract  alleged  to  have  been entered into between him and the appellant, officers of  the second  respondent Corporation, for appointment to the  post of  Instrumentation Foreman in the appellants’ company,  and for  consequential  reliefs. He contended that he  had  been sponsored  by  the  Chairman and Managing  Director  of  the second respondent Corporation, which was the holding company of the appellants’company by his two letters for appointment as an Apprentice Engineer in terms of a scheme formulated by the  Government  of  India. The appellants  and  the  second respondent denied the existence of any contract.      The trial court dismissed the suit. However, on appeal, the first appellate court decreed the suit and directed  the first appellant to appoint the first respondent to the  post of  Apprentice  Engineer under the scheme sponsored  by  the Government  of India. This was confirmed, in appeal, by  the High Court, which held the first respondent was entitled  to be  appointed  to the post of Instrumentation  Foreman  with effect  from the date on which the former incumbent of  that post had resigned.      In  the  appeal  before this Court, on  behalf  of  the appellants  it was contended that there was no  evidence  of the contract having been entered into by the appellant  with the first respondent; nor was there any evidence of a scheme of  the  Government  of  India, which  entitled  him  to  be appointed to any post in the appellants’ company, and  that, in  any  view, he was not qualified for  appointment  as  an Apprentice, much less to the higher post of  Instrumentation Foreman.                                                        469      On   behalf  of the first respondent it  was  contended that  the letters addressed by the second respondent in  his capacity  as Chairman, and Managing Director of the  holding

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company,  to the appellants, the officers of the  subsidiary company, made  it obligatory on the part of  the  latter  to appoint  him in terms of the Government of India scheme,  as so  found  by both the first Appellate court  and  the  high Court.      Allowing the appeal, this Court,      HELD: 1.1 A contract of employment cannot ordinarily be enforced  by or against an employer.  The remedy is  to  sue for  damages.  The grant of specific performance  is  purely discretionary and must be refused when not warranted by  the ends  of justice.  Such relief can be granted only on  sound legal   principles.   In  the  absence  of   any   statutory requirement,  courts do not ordinarily force an employer  to recruit  or  retain in service an employee not  required  by the  employer.  There are, of course, certain exceptions  to this rule, such as in the case of a public servant dismissed from  service  in  contravention  of  Article  311  of   the Constitution; reinstatement of a dismissed worker under  the Industrial  Law;  a  statutory  body  acting  in  breach  of statutory obligations, and the like. [475-E]      B.N. Tiwari v. District Board, Agra, AIR 1964 SC  1680; U.P.  State Warehousing Corporation v. C.K. Tyagi, [1970]  2 SCR  250  and Executive Committee of Vaish  Degree  College, Shamli  and  Ors. v. Lakshmi Narain and Ors., [1976]  2  SCR 1006, referred to.      Indian Contract and Specific Relief Acts, by  Polock  &  Mulla, Tenth Edn., page 983 and Halsbury’s Laws of England. Fourth Edn., Volume 44, paragraphs 405 to 420, referred to.      1.2  In the instant case, neither from the  plaint  nor from  the evidence is it possible to identify and  concluded contract   to which the first respondent is a party or which he  can enforce.  There is no specific plea or  evidence  as regards  the particulars of the scheme of the Government  of India  in  terms of which he seeks relief whether  it  is  a statutory  scheme, and if so, what are the provision  relied on by him and whether a duty is cast on the appellants and a benefit  is conferred on persons like the first  respondent. Assuming  that  such a scheme existed or any  such  contract bound the parties, it would be violative of all basic  norms of  law   to  decree a suit for specific  performance  of  a contract of personal service.[472E-G]                                                      470      1.3  Courts  do not ordinarily enforce  performance  of contracts  of a personal character, such as a contract    of employment.   Subject to certain well defined categories  of exceptions, law does not permit, and the Specific Relief Act does  not contemplate,  the enforcement of a contract  of  a personal  nature by a decree for specific performance.   The facts   of  the  instant  case  do  not  fall  within    the exceptions. [472A, 474D]      Rigby  v. Connol, [1880] 14 ChD 482, 487 and  Executive Committee  of  Vaish Degree College, Shamli  and  Others  v. Lakshmi Narain and Ors., [1976] 2 SCR 1006 at 1020, referred to.      Cheshire,  fifoot and Furmston’s Law of Contract,  11th ed.,  p. 614 and Halsbury’s Laws of England Fourth  Edition, Volume 44, at page 407, referred to.      1.4 Even if there was a contract in terms of which  the first respondent was entitled to seek relief, the only which was   available  in  law  was  damages  and   not   specific performance.   Breach of contract must ordinarily  sound  in damages,  and  particularly  so  in  the  case  of  personal contracts.  Assuming that a contractual relationship   arose consequent   upon  the  letters  addressed  by  the   second respondent  to the first appellant, the first respondent was

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a   total  stranger  to  any  such  relationship,   for   no relationship  of a fiduciary character existed  between  the first   respondent   and  the  second  respondent   or   the appellants.   Neither  on principles of law  or  equity  nor under  any  statute  did the  first  respondent  acquire  an enforceable right by reason of the letters exchanged between the  appellant  and  second respondent,  nor  did   he  have private  of any kind to their relationship.   No  collateral contract  to which he was a party did arise on the facts  of this  case  and at no time was the second respondent  acting as  his  agent.  There  is no express  or  implied  contract which is enforceable by him. [475-H, 476-B]      In the circumstances, the decrees of the High Court and the  first  appellate Court are set aside and  that  of  the trial court  is restored.[476D]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3644  of 1989.      From  the  Judgment and Order dated 10.10.1988  of  the Allahabad High Court in S.A. No. 194 of 1987.      Yoeshwar  Prasad  and  Mrs.  Shobha  Dikshit  for   the Appellants.                                                    471      B.D.  Agarwala,  Gopal  Subramaniam,  Ms.  Bina  Gupta, Arvind Verma, Ms. Monika Mohil, R.K. Srivastava and P. Misra for the Respondents.      The Judgment of the Court was delivered by      THOMMEN,  J. This appeal is by defendants 1 and 2 in  a suit for mandatory injunction.  The appellants are  officers of Nandganj Sihori Sugar Co. Ltd., Rae Bareli, of which  the third defendant, the U.P. State Sugar Corporation Ltd.  (the second  respondent herein) is the holding company. The State of  Uttar  Pradesh  (the third  respondent)  is  the  fourth defendant.   The  plaintiff,  Badri Nath  Dixit  (the  first respondent), instituted the suit for mandatory injunction to enforce  a  contract  alleged  to  have  been  entered  into between  the plaintiff and defendants 1 & 2 for  appointment of  the plaintiff to the post of Instrumentation Foreman  in the defendants  company  and for consequential reliefs.  The plaintiff  contended   that he had been  sponsored  by   the Chairman  and Managing Director of the third  defendant,  by his letters dated 18 October, 1982 and 14 December, 1982 for appointment by defendants 1 & 2 as an Apprentice Engineer in terms  of a scheme formulated  by the Government  of  India, but  such  appointment  was not made by defendants  1  &  2. The   plaintiff   prayed  for   an   injunction   compelling defendants   1   &  2  to  appoint  him  to  the   post   of ‘Instrumentation Foreman’, which post, according to him, was at  the time of the suit lying vacant.  In effect, what  the plaintiff   seeks  is  a  decree  to  compel  the   specific performance of a contract of personal service.      Defendants  1  to 3  filed a  joint  written  statement denying  the  allegations.   They stated that there  was  no contract,  as  alleged, and there was no vacancy    for  any post  to which the plaintiff was qualified to be  appointed. They   further   stated   that  the   plaintiff   had   been conditionally   offered  appointment  as  a   Fitter   Trade Apprentice,   subject  to  his  possessing   the   requisite qualifications  and his selection by the  Apprentice  Board, Kanpur.    The   plaintiff  was  not  qualified   and   was, therefore,  not  selected.   They  further  contended   that neither as an Apprentice nor as Instrumentation Foreman  was

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the  plaintiff  qualified  to be appointed.   The  suit  was dismised  by  the trial court.  However, on  appeal  by  the plaintifif it was decreed by the learned Additional District Judge  who directed defendant 1 to appoint the plaintiff  to the post of Apprentice Engineer under the s cheme  sponsored by  the Government of India.  This  decree was confirmed  in appeal by the High Court by the impugned judgment.  The High Court further held                                                     472 that   the  plaintiff was entitled to be appointed   to  the post of Instrumentation Foreman with effect from the date on which the former incumbent of that post had resigned.      Counsel  for the appellants (defendants 1 & 2 )  submit that  there  is no evidence of the alleged  contract  having been entered into by the defendants with the plaintiff;  nor is there any evidence of a scheme of the Government of India which entitled the plaintifif to be appointed to any post in the defendants’ company.  Counsel states that, in any  view, the  plaintiff   was  not qualified for  appointment  as  an Apprentice   and   much   less  to  the   higher   post   of Instrumentation Foreman.      The  plaintiff’s  counsel, however,  submits  that  the letters addressed by the third defendant in his capacity  as Chairman  and  Managine Director of the holding  company  to defendants  1 & 2, the officers of the  subsidiary  company, made it obligatory on the part of the latter to appoint  the plaintiff  in terms of the Government of India  scheme.   It was  so  found by the first Applleate Court   and  the  High Court.   That finding is not liable to be impeached  in  the present  proceeding.   He  says  that  the  defendants  are, therefore,  liable to be compelled by means of  a  mandatory injunction  to  honor  the offer held out  by  them  to  the plaintiff,  who is entitled to enforce the contract  founded on such offer by seeking specific performance of it.      We are surprised that the first Appellate Court and the High Court should have proceeded on the assumption that  any enforceable  contract existed.  Neither from the plaint  nor from  the evidence is it possible to identify and  concluded contract  to  which the plaintiff is a party  or  which  the plaintiff can enforce.  The defendants deny the existence of any  contract  or any other relationships  which  gives  the paintiff any cause of action against the defendants.   There is no specific plea or evidence  as regards the  particulars of the alleged scheme of the Government of India in terms of which the plaintiff seeks relief.  Whether it is a statutory scheme,  and if so what are the provisions relied on by  the plaintiff, and whether a duty is cast on the defendants  and a  benefit  conferred  on persons  like  the  plaintiff,  is neither  pleaded nor spoken  to inevidence.   Assuming  that any  such  scheme  existed or any such  contract  bound  the parties, to have decreed a suit for specific  performance of a  contract of personal service on the facts alleged by  the plaintiff,  was to  violate all basic norms of law.   Courts do  not  ordinarily enforce performance of  contracts  of  a personal character, such as a contract  of  employment.   In the words of Jessel M.R.:                                                       473          "The   courts  have  never  dreamt   of   enforcing          agreements  strictly  personal  in  their   nature,          whether they are  agreements of hiring and service,          being  the  common relation of master  and  servant          ..." [Rigby v. Connol, [1880] 14 ChD 482, 487;  see          Cheshire,  Fifoot and Furmston’s Law  of  Contract,          11th ed., p. 614]."      In  the joint  written statement filed by defendants  1

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to  3, representing the holding  and  subsidiary  companies, the  alleged  contract has been clearly denied.  We fail  to see how the letters addressed by the Chairman of the holding company  to the officers of the subsidiary company  advising the  appointment  of the plaintiff to a post  which  he  was found to be not qualified to hold could have resulted in any contract  between  the defendants of the one  part  and  the plaintiff  of  the other part.  Assuming  that  the  letters written by the Chairman of the holding company were  in  the nature  of  a  direction  which  a  subsidiary  company  was compelled  to carry out, we fail to see how on the facts  of this  case, the plaintiff, who had no privity whatever to  a contract,  assuming there was a contract, could enforce  any right under it.  In the first place, the letters sent by the Chairman  of the holding company are merely in nature of  an advise giving rise to no contractual relationship.  Even  if the  advise is taken to be of the character of  a  direction which  the subsidiary company is bound to comply  with,  any obligation arising from such direction is not enforceable at the  instance of a total stranger.  The Chairman  was in  no sense   acting  as  a  trustee  of  the  plaintiff  and   no relationship of a fiduciary character whatever is alleged or proved to have existed between them.  Assuming that the then Chairman  was personally interested in the  plaintiff,  that was not an interest which is legally enforceable against the defendants.   Such predilection on the part of the  Chairman of  a  holding  company,  whatever be  its  impact   on  the subsidiary  company, does not give rise to  any   actionable claim.   There  is  no  evidence,  whatsoever,  as  to   the existence of a Government scheme, apart from a reference  to it  in the Chairman’s letter.   The plaintiff has  not  shed any  light  upon it.  The defendants have not  admitted  any such scheme.  Even if a scheme existed, there is no evidence that it was enforceable at the instance of a person  seeking its  benefit.   Nor has the plaintiff  pleaded  estoppel  or adduced any evidence to support any such contention.      In  the  absence  of any specific plea or  evidence  as regards  the nature and other particulars of the scheme,  it is preposterous that the courts below should have thought it fit   to  issue  a  mandatory  injunction  to   compel   the performance of the alleged contract of service in terms                                                         474 of  or  pursuant to an unknown scheme.  Subject  to  certain well  defined  categories of exceptions, the  law  does  not permit,  and the Specific Relief Act does  not  contemplate, the  enforcement  of a contract of a personal  nature  by  a decree for specific performance.  The facts of this case  do not  fall  within the exceptions.  Assuming  that  the  fact alleged by the plaintiff to be true-as stated earlier, there is  no evidence whatever to support them-the  plaintifif  is not entitled to any relief other than damages in the even of his being in a position  to prove that he has been damnified by  reason  of  the defendants’ failure  to  carry  out  the obligations arising under what he calls a  contract.      In  Halsbury’s Laws of England, Fourth Edition,  Volume 44, at page  407, it is stated:          "407.  Contracts for personal work or services.-  A          judgment for specific performance of a contract for          personal work or services is not pronounced, either          at the suit of the employer or the employee.    The          court  does  not  seek  to                   compel          persons  against their will to maintain  continuous          personal and confidential relations.  However, this          rule is not absolute and without exception.  It has          been  held that an employer may be restrained  from

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        dismissing  an  employee in breach of  contract  if          there is no loss of confidence between employer and          employee   or  if  (at  least  in  a  contract   of          employment to carry out a public duty) the employee          has  been  dismissed  in a manner  which  does  not          comply  with statutory or  contractual  regulations          governing dismissal.  No court may, whether by  way          of  an order of specific performance of a  contract          of  employment   or  an  injunction  restraining  a          breach  or  threatened breach of such  a  contract,          compel an employee to do any work or attend  at any          place for the doing of any work.          This  principle applies not merely to contracts  of          employment, but to all contracts which involve  the          rendering   of continuous services by one person to          another,  such  as a contract to work  a  railway          line..."                                         (emphasis supplied)      As  stated  by this Court in  Executive   committee  of Vaish Degree College, Shamli and Others v. Lakshmi and Ors., [1976] 2 SCR 1006 at 1020:                                                     475          "....a   contract   of  personal   service   cannot          ordinarily  be  specifically enforced and  a  Court          normally  would  not give a  declaration  that  the          contracts  subsists  and the  employee  even  after          having  been removed from service can be deemed  to          be  in service against the will and consent of  the          employer.  This rule, however, is subject to  three          well  recognised  exceptions; (i)  where  a  public          servant  is  sought to be removed from  service  in          contravention  of the provisions of Art.311 of  the          Constitution  of  India;  (ii) where  a  worker  is          sought  to be reinstated on being  dismissed  under          the  Industrial  Law; and (iii) where  a  statutory          body  acts in breach or violation of the  mandatory          provisions of the statute."                                          (emphasis supplied)      A contract of employment cannot orodinarily be enforced by  or  against  an  employer.  The remedy  is  to  sue  for damages.   (See  section  14 read with  section  41  of  the Specific Relief Act; see Indian Contract and Specific Relief Acts,  by Polock & Mulla, Tenth Edn., page 983).  The  grant of specific performance is purely discretionary and must  be refused  when  not warranted by the ends of  justice.   Such relief  can be granted only on sound legal  principles.   In the  absence  of any statutory requirement,  courts  do  not ordinarily force an employer to recruit or retain in service an  employee  not required by the employer.  There  are,  of course, certain exceptions to this rule, such as in the case of a public servant dismissed from service  in contravention of  Article  311  of the Constitution;  reinstatement  of  a dismissed worker under the Industrial Law; a statutory  body acting  in  breach of statutory obligations, and  the  like. (B.N. Tiwari v. District Board, Agra, AIR 1964 SC 1680; U.P. State  Warehousing Corporation v. C.K. Tyagi, [1970]  2  SCR 250; Executive Committee of Vaish Degree College, Shamli and Ors.  v.  Lakshim Narain and  Ors., [1976] 2  SCR  1006  see Halsbury’s   Laws  of  England,  Fourth  Edn.,  Volume   44, paragraphs 405 to 420.)      On  the facts of this case, the High court was  clearly wrong  in  issuing  a mandatory injunction  to  appoint  the plaintiff.   Even if there was a contract in terms of  which the plaintiff was entitled to seek relief,  the only  relief which  was  available in law was damages  and  not  specific

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performance.   Breach of contract must ordinarily  sound  in damages,  and  particularly  so  in  the  case  of  personal contracts.   Assuming that a contractual relationship  arose consequent upon the letters addressed by the third defendant to the 1st  defendant, the plaintiff was a total stranger to any  such relationship, for, on the facts of this  case,  no relationship  of a fiduciary character existed between   the plaintiff and                                                     476 the  third  defendant  or  other  defendants.   Neither   on principles  of law or equity nor under any statute  did  the plaintiff  acquire  an enforceable right by  reason  of  the letters  exchanged between the first and  third  defendants. The   plaintiff  had  no  privity  of  any  kind  to   their relationship.  No collateral contract to which the plaintiff was a party did arise on the facts of this case.  At no time was the third defendant acting as an agent of the plaintiff. There is no express or implied contract which is enforceable by the plaintiff.  (See Halsbury’s Laws of England.,  Fourth Edn., Volume 9, paragraphs 334 to  342).      The  plaintiff’s  counsel suggests that  the  claim  is justifiable  on  the basis of  legitimate  expectations  for appointment.   There  is  no specific plea  or  evidence  to support  any such contention.  Whatever  expectations  might have   arisen from the letters of the third defendant,  they could not have in law given rise to any right enforceable by specific performance.      For all these reasons we hold that the plaintiff’s suit for  mandatory  injunction, on the facts of  the  case,  was rightly dismissed by the trial court and wrongly decreed  by the first Appellate Court and the High Court.  We set  aside the decrees of the High Court and the first Appellate  Court and  restore that of the trial court.  The plaintiff’s  suit shall   accordingly   stand dismissed  and  the  defendants’ appeal allowed with  costs throughout. N.P.V.                                       Appeal allowed.                                                        477             477