Research › Browse › Judgment

Kerala High Court · body

1960 DIGILAW 366 (KER)

Ramacharya v. Commonwealth Trust Ltd

1960-08-31

P.G.MENON, T.C.RAGHAVAN

body1960
JUDGMENT T.C. Raghavan, J. 1. The appellant, who was the plaintiff in the lower court, filed the suit, from which the present appeal arises, to recover Rs. 18,000/- as damages for breach of contract, in dismissing him from service before the term of his employment expired. He was appointed Dyeing Master by the respondent company in June, 1949 in their weaving factory at Calicut. Initially his appointment was only for three months but he was confirmed even earlier and an agreement was entered into between the parties on 1st July, 1949, which was to be in force for a term of three years. This was renewed even before the end of the term and a new agreement was executed to enure for three years from 1st of October, 1949 with a re-graded salary. Before the expiry of this term a third agreement was entered into between the parties on 12th September, 1952, which was to come into force from 1st October, 1952. We are concerned in this appeal only with this last agreement. On the 30th of January, 1953 the defendant company's General Manager in India caused a notice of termination of service of the plaintiff to be served on him. This notice, Ext. A13, directed the plaintiff to hand over charge the very next day and it also offered to pay him three months' salary. The appellant handed over charge on the 31st of January, 1953 as directed in Ext. A13 and he also protested to the manner in which his service was terminated. Some correspondence passed between the parties and some attempt at arbitration was also made, with which we are not concerned in this appeal. The appellant claimed that his employment was for a period of three years certain and therefore the defendant could not terminate his service without assigning good reasons and without giving him an opportunity to meet those charges. He further contended that the notice of termination of his service was void. In the result, he claimed the full salary for the balance of the three years' term of his employment, which remained unexpired at the time of his discharge. The appellant had a further case that Ext. A13 was not issued by a properly constituted authority, who had the power to issue such a notice, for, according to him, the General Manager in India was not competent to discharge him from service. 2. The appellant had a further case that Ext. A13 was not issued by a properly constituted authority, who had the power to issue such a notice, for, according to him, the General Manager in India was not competent to discharge him from service. 2. The defendants contended, inter alia, that the appointment of the appellant was not for a period of three years certain, but was only an appointment terminable by the defendants under the terms of the agreement, Ext. All, dated 12th September, 1952. They also contended that they offered three months' salary to the appellant which was refused by him. It was further contended by the defendants that the General Manager, Mr. Burnett, was competent to terminate the service of the plaintiff and as such Ext. A13 was proper and valid. 3. The learned Subordinate Judge, in a well written judgment, considered all aspects of the case and came to the conclusion that Mr. Burnett had the authority to terminate the service of the plaintiff, that the defendants did not, as a matter of fact, pay three months' salary to the plaintiff and as such they violated the provisions of the agreement, Ext. A11, and that the defendants had the right to determine the service of the plaintiff without giving a charge sheet to him and giving him an opportunity to be heard. In the result he held that the termination of service of the plaintiff was in violation of the provisions of Ext. A11 and therefore the plaintiff was entitled to damages. But the learned Judge fixed the quantum of damages at three months' salary in lieu of notice and disallowed the claim of the plaintiff for the balance. He decreed the suit for three months' salary, Rs. 2, 250/-, and allowed proportionate costs also to the plaintiff. The defendants were directed to bear their costs and were also not given costs against the plaintiff for the portion of the plaintiff's claim which was disallowed. The plaintiff appeals claiming that the lower court should have allowed his claim in full and the defendants have filed a cross appeal alleging that the lower court should have allowed them proportionate costs on the portion of the claim of the plaintiff disallowed by the lower court. 4. Mr. N. Sundara Iyer, the learned advocate of the appellant, has raised three main contentions before us. The first is that Mr. 4. Mr. N. Sundara Iyer, the learned advocate of the appellant, has raised three main contentions before us. The first is that Mr. Burnett, the General Manager of the defendant company in India, was not competent to dismiss the appellant from service. This contention, we are afraid, is not of much force. Ext. A11 was signed by Mr. Burnett and therefore if Mr. Burnett had the power to appoint the plaintiff he certainly had the power to terminate his service also. So the only question we have to consider is whether Mr. Burnett had such power to appoint the plaintiff. Under the Memorandum and Articles of Association of the defendant company, Ext. B9, the Board of Directors in England had the power to appoint a duly authorised attorney and exercising that right, the Board of Directors appointed Mr. Ferrelly, one of the Directors, as the duly authorised attorney to manage the company's business throughout the world under Ext. B1. Ext. B1 gave the attorney the power to sub-delegate his powers and Mr. Ferrelly sub-delegated his powers in favour of Mr. Burnett as per Ext. B2. Therefore the Memorandum and Articles of Association of the defendant company conferred the power to appoint an attorney with powers of sub-delegation and it was only under such powers Mr. Ferrelly was appointed as attorney under Ext. B1 and he sub-delegated his powers to Mr. Burnett, the 'General Manager in India, under Ext. B2, by virtue of the powers of sub-delegation expressly conferred on him by Ext. B1. Therefore it is clear that Mr. Burnett was validly invested with powers of appointment, under which the plaintiff was appointed and under the same powers his service was also determined. Therefore the objection to the validity of Ext. A13 on this score is untenable. The maxim delegata potestas non potest delegari (a delegated authority cannot be re-delegated) or the maxim delegatus non potest delegare (an agent cannot delegate) cannot have any application to a case like the present one. The rule is stated thus in Halsbury's Laws of England Vol. I, p. 169, paragraph 396 : "Delegatus non potest delegare is the maxim which lays down the general rule that an agent cannot delegate his powers or duties to another, in whole or in part, without the express authority of the principal or authority derived from statute." In the present case the sub-delegation by Mr. I, p. 169, paragraph 396 : "Delegatus non potest delegare is the maxim which lays down the general rule that an agent cannot delegate his powers or duties to another, in whole or in part, without the express authority of the principal or authority derived from statute." In the present case the sub-delegation by Mr. Ferrelly in favour of Mr. Burnett is by virtue of the express authorisation contained in the Memorandum and Articles of Association of the defendant company and the Power of Attorney, Ext. B1, granted to Mr. Ferrelly and such authorised sub-delegation has to be held to be proper and valid sub-delegation. 5. The next contention of Mr. Sundara Iyer is that the appointment of the plaintiff was for three years certain and as such it could not be terminated by the defendants without assigning valid reasons and also without giving the plaintiff an opportunity to be heard. This argument is based on Clause 2(a) of Ext. A11 which reads : "2, The Company expressly agrees with the Employee as follows: (a) The Company will pay to the Employee during the term of his engagement hereunder a salary at the following rates, viz: Rupees Seven hundred and fifty (Rs. 750) per calendar month for the first year. Rupees Seven hundred and fifty (Rs. 750) per calendar month for the second year. Rupees Seven hundred and fifty (Rs. 750) per calendar month for the third year............................." The learned counsel's argument is that this is a definite engagement for a certain period of three years and the three separate clauses, providing for the salary for the three years separately, indicates that the intention of the parties was to continue the employment for a definite period of three years. We find it difficult to agree with this contention. The word "engagement" appearing in Clause (a) is indicative of one thing, that is, that the company is liable to pay only for the term of the "engagement" of the employee in a contradistinction with his "employment" for the three years. This is an indication that what was contemplated by the parties was only to pay and receive the particular salary if the engagement continued and it does not indicate that the term of employment was three years certain. A reading of another clause of Ext. This is an indication that what was contemplated by the parties was only to pay and receive the particular salary if the engagement continued and it does not indicate that the term of employment was three years certain. A reading of another clause of Ext. All, i.e., Clause 4( a) which we have to consider later, also supports this interpretation of Clause 2(a). Therefore we hold that the employment contemplated under Clause 2(a) is not an employment for any definite period certain, but is only one, which can be terminated under the other provisions of Ext. A11. 6. The last contention of the learned counsel is that Clause 4(a) of Ext. A11 does not give an unfettered right to the defendant to terminate the service of the plaintiff and the service can be terminated only on valid grounds and that also after hearing the plaintiff. We should extract the relevant portion of Clause 4(a) which reads : "4(a) Notwithstanding anything elsewhere herein contained the Company shall be entitled at any time (if it shall appear to the Company expedient so to do) to determine this Agreement by giving three calendar months' notice in writing or paying or crediting in account three calendar months salary in lieu of notice to the Employee............................and the Employee shall be entitled to determine this Agreement at any time on giving the Company three calendar months' notice in writing or repaying to the Company a sum equal to the amount of the substantive salary without any temporary or special allowances earned by him in respect of the three calendar months immediately preceding the date of such repayment in lieu of notice." The reason that is given in Ext. A13 for determining the service of the plaintiff is the decision of the defendant company to re-organize the management of their Dye Works and nothing more. According to Mr. Sundara Iyer this is not a valid ground as contemplated by Clause 4(a) of Ext. A11. We are not in agreement with this contention. Clause 4(a) indicates clearly that if it appears to the Company "expedient so to do", the company could determine the service of the plaintiff. The word "expedient means advantageous, suitable; politic rather than just in the Oxford Dictionary. The term is defined in the Advanced Learner's Dictionary as advantageous or suitable; likely to bring an advantage, but perhaps not quite right or just. The word "expedient means advantageous, suitable; politic rather than just in the Oxford Dictionary. The term is defined in the Advanced Learner's Dictionary as advantageous or suitable; likely to bring an advantage, but perhaps not quite right or just. These indicate that what is expedient is what is advantageous, suitable or politic to the party, who considers it expedient and it need not be right or just to the other party concerned. If that be so, the defendant company is entitled to say that, in view of their decision to re-organize the management of their Dye Works, the termination of the service of the plaintiff was expedient, as far as they are concerned, and the plaintiff is not entitled to say that it was neither just nor right, as far as he is concerned. Therefore we are of the opinion that Ext. A11 is only a contract of employment, which provided for a certain mode of termination under Clause 4(a) at the discretion of either party to the agreement. Under such circumstances the reason given for terminating the service of the plaintiff is quite valid, because it is only "expediency" that is required, from the point of view of the defendants and it need not be right or just to the plaintiff. 7. The further question that has to be considered is whether the defendant company has complied with Clause 4(a) in discharging the plaintiff from service. On this question the learned Subordinate Judge, after a careful consideration of the correspondence between the parties, has held that there was no payment of three months' salary by the defendant company to the plaintiff. Admittedly the condition of three months' notice of termination was not complied with and the notice,, Ext. A13, to be valid should have been accompanied by payment of three months' salary. The learned advocate for the respondent has not been able to point out anything to show that the defendants paid cash, issued a cheque or at least adjusted or credited the accounts of the plaintiff. In the above circumstances we would readily accept the finding of the Subordinate Judge, that the terms of Clause 4(a), regarding notice or payment of salary in lieu of notice, have not been complied with. Consequently it has to be held that the notice of termination of service is illegal, improper and void and therefore the dismissal is also illegal. In the above circumstances we would readily accept the finding of the Subordinate Judge, that the terms of Clause 4(a), regarding notice or payment of salary in lieu of notice, have not been complied with. Consequently it has to be held that the notice of termination of service is illegal, improper and void and therefore the dismissal is also illegal. As such the defendants are liable to pay damages to the plaintiff. 8. Regarding the quantum of damages the parties themselves have indicated the measure of damages in their agreement by providing for payment in lieu of notice and the provision is for payment of three months' salary. In such a case of a contract of employment, where the parties are at liberty to terminate the employment by three months notice or payment of three months' salary in lieu of notice on either side, since the parties themselves have fixed the measure of damages in case of wrongful termination of employment, the aggrieved party would be entitled to only three months' salary, for such wrongful termination. Therefore the lower court was right in giving a decree to the plaintiff for three months' salary in lieu of notice as damages for wrongful dismissal. 9. We would, in passing, refer to one decision of the Madras High Court in Percy Edward Warne v. Ouchterlony Valley Estate (AIR 1956 Madras 505). Their Lordships of the Madras High Court, Rajamannar C. J. and Panchapakesa Ayyar J. held in that case that what the employee would be entitled, in a case of wrongful dismissal from service under a contract of employment, which provided for terminating the employment by three months' notice on either side at the perfect discretion of either party, would be only the pay and allowances due for the period of notice and nothing more and we are in respectful agreement with this view. 10. We are of opinion that there are no merits in the cross appeal. The cross appeal, as we have already observed, is only against the order of the lower court disallowing the defendant's claim for proportionate costs on the amount of the claim of the plaintiff disallowed by the lower court. We think that the lower court was right in disallowing this. 11. The cross appeal, as we have already observed, is only against the order of the lower court disallowing the defendant's claim for proportionate costs on the amount of the claim of the plaintiff disallowed by the lower court. We think that the lower court was right in disallowing this. 11. In the result we dismiss both the appeal and the cross appeal and in the circumstances, we direct the parties to bear their respective costs, both in the appeal and in the cross appeal.