JUDGMENT ASHOK AGARWAL, J.:---The archaic maxim "Personal Services cannot be specifically enforced" should no longer be permitted to hold the field in the modern and changed times, is the burden of the song which Mr. Singhavi has tried to put to tune in the present Notice of Motion. 2. In a suit for declaration that the termination of his service is illegal, the present Notice of Motion claims interim reliefs restraining the defendants from withdrawing certain perquisites which the plaintiff enjoyed while in service. 3. During the period February, 1984 and end of March, 1994 the plaintiff employed with the defendants as General Manager (Operations). The plaintiff has annexed at Exhibit-B to the plaint, a letter dated the 10th of February, 1984 under which the plaintiff was employed. The letter contained several Terms and Conditions of employment. Clauses 10 and 15, which are relevant for the present enquiry, provides as under : "10. If, at any time in our opinion, which is final in this matter, you are insolvent or found guilty of dishonesty, disobedience, disorderly behaviour, negligence, indiscipline, absence from duty without permission or of any other conduct considered by us detrimental to our interest, or of violation of one or more terms of this letter, your services may be terminated without notice. 15. Your appointment may be terminated at any time, without assigning any reason, by three months notice in writing by either side. Your appointment may also be terminated by the Company, without notice, by payment to you of an amount equivalent to three months consolidated salary. It is also left to the discretion of the Company to decide whether the period of any notice shall run concurrently with the period of any leave which may be due or may be granted to you. In case you leave our employment without notice, we shall have the right to deduct as liquidated damages an amount equivalent to three months consolidated salary from any money or monies that may be due to you." 4. In August, 1993 the plaintiff applied for being appointed to the post of Chief Executive Officer for which the defendants had advertised. The defendants, however, instead of accepting the offer started pursuading the plaintiff to tender his resignation. The plaintiff was, thus, pursuaded to tender a resignation letter dated 27th of August, 1993. In August, 1993 the plaintiff applied for being appointed to the post of Chief Executive Officer for which the defendants had advertised. The defendants, however, instead of accepting the offer started pursuading the plaintiff to tender his resignation. The plaintiff was, thus, pursuaded to tender a resignation letter dated 27th of August, 1993. A copy of the resignation letter is annexed at Exhibit-A to the plaint. The letter informs the defendants that due to family reasons the plaintiff was resigning from service. The aforesaid resignation was accepted by the defendants on the 14th of February, 1994. The acceptance was directed to take effect from the 31st of March, 1994. In the meanwhile, the plaintiff, it appears, gave a second thought and by a letter dated the 1st of March, 1994 sought to withdraw the resignation. By a communication dated the 11th of March, 1994 the defendants informed the plaintiff that the withdrawal was unacceptable as the company had already appointed another person to his post. The defendants, by another letter of the same date, informed the plaintiff about the grant of increment of Rs. 1,000 per month for the period 1st September, 1993 to 31st of March, 1994 in line with the increments granted to the other senior executives. 5. On the 28th of March, 1994 the plaintiff filed, in the City Civil Court, Suit No. 2013 of 1994 seeking to impugn the refusal of the defendants to accept the withdrawal of resignation. In the suit, ad-interim relief was refused. The plaintiff, on the 30th of March, 1994, preferred an appeal being A.O. No. 374 of 1994. On the 31st of March, 1994 the defendants terminated the services of the plaintiff by offering three months salary under Clause 15 of the terms of appointment dated the 10th of February, 1984. With the termination, the appeal from order was withdrawn as the same had become infructuous. Pursuant to the liberty granted, the plaintiff has, on the 6th of April, 1994, filed the present suit. 6. In the present suit, the plaintiff has taken out present Notice of Motion claiming interim reliefs. What is of significance is that the plaintiff has no where made a prayer for continuing him in service. He has not claimed that the order of impugned termination is null and void and he, therefore, continues in service. 6. In the present suit, the plaintiff has taken out present Notice of Motion claiming interim reliefs. What is of significance is that the plaintiff has no where made a prayer for continuing him in service. He has not claimed that the order of impugned termination is null and void and he, therefore, continues in service. He has not prayed for a direction against the defendants that he should be continued in service. All that he has prayed is that he should be continued being granted the perks which go alongwith his service. He has prayed for an injunction restraining the defendants from disturbing his possession in respect of his official residence, official car and his membership with the Bombay Gymkhana club which perks he was enjoying in his capacity of being in employment with the defendants. The present Notice of Motion was moved for ad-interim reliefs. By an order passed on 12th of April, 1994 ad-interim reliefs were refused. The order inter alia provides :--- ".....Virtually the suit is for specific performance of contract of service. According to Mr. Singhvi, learned Counsel appearing for the plaintiff, Clause 15 of the letter of appointment is opposed to public policy and as such, void under the provisions of section 23 of the Contract Act. In support of his submission, Mr. Singhvi has relied upon the two judgments of the Supreme Court reported in (Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly and Central Inland Water Transport Corporation Ltd. v. Tarun Kanti Sengupta)1, A.I.R. 1986 S.C. 1571 and A.I.R. 1991 S.C. 107. He has also placed reliance on the judgment of Kerala High Court reported in (1993 Lab.I.C. 258)2 , and of Calcutta High Court reported in A.I.R. 1973 Cal. 258. "Mr. Makhija, learned Counsel appearing for the defendants, has submitted that the Judgments relied upon by Mr. Singhvi have no applicability to the facts of the case. He has further submitted that in the judgments relied upon by Mr. Singhvi either Article 311 of the Constitution of India or Standing Orders were involved whereas in the present case, the contract was of private employment which has been legally terminated by the 2nd defendants. Mr. Makhija further submitted that if at all the plaintiff has any right, it is to claim damages if the plaintiff proves to the satisfaction of the Court that the termination was bad. Mr. Makhija further submitted that if at all the plaintiff has any right, it is to claim damages if the plaintiff proves to the satisfaction of the Court that the termination was bad. In support of his submission, Mr. Makhija has put reliance on the judgment of the Supreme Court reported in (Nandganj Sihori Sugar Co. Ltd. Rae Bareli v. Badri Nath Dixit)3, A.I.R. 1991 S.C. 1525 wherein it has been held that a contract of employment cannot ordinarily be enforced by or against an employer. It has been further held by the Supreme Court in that case that the remedy is to sue for damages. However, exception to rule has been carved out by the Supreme Court in 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. The present case does not fall in any such exception. In the circumstances, since no prima facie case is made out, no ad-interim relief is granted." 7. Being unsuccessful in obtaining ad-interim reliefs, the plaintiff on the 5th of May, 1994 filed yet another suit in the City Civil Court being Suit No. 3006 of 1994. In the suit, he prayed for an injunction restraining the defendants from giving effect to the order of termination and from withdrawing his perks. Though differently worded, the suit in substance makes the very same prayers which were made in the earlier Suit No. 2013 of 1994 and the present suit. In the later filed suit, the plaintiff prayed for interim reliefs but the same have been denied to him. It is, in these circumstances, that the Notice of Motion is taken up for hearing and final disposal. 8. Mr. Singhvi, the learned Counsel appearing in support of the Notice of Motion, has vehemently urged that the old archaic maxim (personal services cannot be specifically enforced), has no application in the present day world and specially, in large companies such as the second defendants. There is hardly anything like personal services being rendered. In fact there is hardly any difference between the working conditions in large companies such as the second defendants and statutory Corporations. As far as the order of termination of the plaintiffs services is concerned, Mr. There is hardly anything like personal services being rendered. In fact there is hardly any difference between the working conditions in large companies such as the second defendants and statutory Corporations. As far as the order of termination of the plaintiffs services is concerned, Mr. Singhvi has pointed out that the same has been sought to be brought about by resorting to the provisions of Clause 15 of the Conditions of Service. Conditions of service have been arrived at practically unilaterally at the instance of the defendants where the plaintiff has had hardly any say. He has characterised the power of the company to terminate his services with three months notice or on payment of an amount equivalent to three months salary as Henry VIII clause. The power of termination contained in the said clause is opposed to public policy and the same deserves to be struck-down and the power exercised by resorting to the said clause deserves to be declared as null and void. 9. Mr. Singhvi has drawn my attention to some provisions of the Specific Relief Act. He has pointed out that whereas under the old Specific Relief Act, 1877 personal services could not be specifically enforced under the provisions of section 21(1)(b). The said provision is conspicuously absent in section 14 of the Specific Relief Act, 1963. According to Mr. Singhvi, the changes brought about in modern times have been taken note of and the archaic provision which debared the enforcement of personal service has been done away with. 10. Mr. Singhvi has relied on several decisions in support of his contentions. He first relied on the case of Nandganj Sihori Sugar Co. Ltd., Rae Bareli v. Badri Nath Dixit, A.I.R. 1991 S.C. 1525, where this is what has been observed : "8. In Halsburys 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. 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 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...." "9. As stated by this Court in (Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain)4, 1976(2) S.C.R. 1006 at p. 1020 : A.I.R. 1976 S.C. 888 at p. 897 : ".....a contract of personal service cannot ordinarily be specifically enforced and a Court normally would not give a declaration that the contract 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 Article 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 of violation of the mandatory provisions of the Statute. "10. A contract of employment cannot ordinarily 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 Acts by Pollock 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. The remedy is to sue for damages. (see section 14 read with section 41 of the Specific Relief Acts by Pollock 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 (S.R. Tewari v. District Board, Agra)5, A.I.R. 1964 S.C. 1680; (U.P. State Warehousing Corporation v. C.K. Tyagi)6, 1970(2) S.C.R. 250 : A.I.R. 1970 S.C. 1244; Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain, 1976(2) S.C.R. 1006 : A.I.R. 1976 S.C. 888; see Halsburys Laws of England, Fourth Edn., Volume 44, paragraphs 405 to 420. "11. 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 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 of a fiduciary character existed between the plaintiff and 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. 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 Halsburys Laws of England, Fourth Edn., Volume 9, Paragraphs 334 to 342). 11. Mr. Singhvi has next relied upon the case of Executive Committee of Vaish Degree and College, Shamli and others v. Lakshmi Narain and others, reported in A.I.R. 1976 Supreme Court 888" which case has been referred to in the earlier cited case of "Nandganj Sihori Sugar Co. Ltd. Rae Bareli v. Badri Nath Dixit". In particular he has relied on the concurring judgment delivered by Bhagwati, J., who has observed : "29. I agree with the final order proposed by my learned brother Fazl Ali, J., but I would like to state my own reasons for reaching that conclusion. The facts giving rise to the appeal have been fully set out in the judgment of my learned brother and it would be a futile exercise to restate them. I will straightway proceed to consider the question of law which arises for determination in the appeal. The question is, whether the termination of the service of the first respondent by the appellant was in violation of statute 30 of the Statutes of the Agra University which applied to the appellant at the material time, and in any event, the termination was ineffective and inoperative as it was not approved by the Vice-Chancellor as required by section 28, sub-section (3) of the Kanpur and Meerut Universities Act, 1965, and in either case, whether the first respondent was entitled to a declaration that the termination was null and void so as to warrant a declaration that he continued in the service of the appellant, or, his claim merely lay in damages. It is a question of some importance. "30. I will first take up the first part of the question. On this part, there was no dispute between the parties that the requirements of statute 30 were not complied with by the appellant in terminating the service of the first respondent. It is a question of some importance. "30. I will first take up the first part of the question. On this part, there was no dispute between the parties that the requirements of statute 30 were not complied with by the appellant in terminating the service of the first respondent. The controversy merely centered round the question whether the termination of service in breach of the requirements of statute 30 rendered the termination null and void so as to entitle the first respondent to a declaration that he continues in service or it amounted merely to a breach of contract giving rise to a claim for damages. Let me first examine this question on principle before turning to the decided cases. There are two distinct classes of cases which might arise when we are considering the relationship between employer and employee. The relationship may be governed by contract or it may be governed by statute or statutory regulations. When it is governed by contract, the question arises whether the general principles of the Law of Contract are applicable to the contract of employment or the law governing the contract of employment is a separate and sui generis body of rules. The crucial question then is as to what is the effect of repudiation of the contract of employment by the employer. If an employer repudiates the contract of employment by dismissing his employee, can the employee refuse to accept the dismissal as terminating the contract and seek to treat the contract as still subsisting? The answer to this question given by general contract principles would seem to be that the repudiation is of no effect unless accepted, in other words, the contracting party faced with a wrongful repudiation may opt to refuse to accept the repudiation and may hold the repudiator to a continuance of his contractual obligation. But does this rule apply to wrongful repudiation of the contract of employment? The trend of the decisions seems to be generally recognized that wrongful repudiation of the contract of employment by the employer effectively terminates the employment : the termination being wrongful entitles the employee to claim damages, but the employee cannot refuse to accept the repudiation and seek to treat the contract of employment as continuing. What is the principle behind this departure from the general rule of law of contract? What is the principle behind this departure from the general rule of law of contract? The reason seems to be that a contract of employment is not ordinarily one which is specifically enforced. If it cannot be specifically enforced, it would be futile to contend that the unaccepted repudiation is of no effect and the contract continues to subsist between the parties. The law in such a case, therefore, adopts a more realistic posture and holds that the repudiation effectively terminates the contract and the employee can only claim damages for wrongful breach of the contract. Now a contract of employment is not specifically enforced because ordinarily it is a contract of personal service and, as pointed out in the first illustration to Clause (b) of section 21 of the Specific Relief Act, 1877, a contract of personal service cannot be specifically enforced. Of course this illustration has now been omitted in the new Specific Relief Act, 1963 and what would be the effect of such omission may be a point which may require consideration some day by this Court. But for the purpose of this case, I will proceed on the assumption that even under the new Act, the law is the same and it frowns on specific enforcement of a contract of personal service. Now what is the rationale behind this principle? That is found stated in the locus classicus of Fry. L.J., in (De Francesco v. Barnum)7, 1890(45) Ch.D. 430 : "For my own part, I should be very unwilling to extend decisions the effect of which is to compel persons who are not desirous of maintaining continuous personal relations with one another to continue those personal relations. I have a strong impression and a strong feeling that it is not in the interest of making that the rule of specific performance should be extended to such cases. I think the courts are bound to be jealous, lest they should turn contracts of service into contracts of slavery, and therefore, speaking for myself, I should lean against the extension of the doctrine of specific performance and injunction in such a manner." This rationale obviously can have application only where the contract of employment is a contract of personal service involving personal relations. It can have little relevance to conditions of employment in modern large-scale industry and enterprise or statutory bodies or public authorities where there is professional management of impersonal nature. It is difficult to regard the contract of employment in such cases as a contract of personal service save in exceptional cases. There is no reason why specific performance should be refused in cases of this kind where the contract of employment does not involve relationship of personal character. It must be noted that all these doctrines of contract of service as personal, non-assignable unenforceable, and so on, grew up in an age when the contract of service was still frequently a "personal relation" between the owner of a small workshop or trade or business and his servant. The conditions have now vastly changed and these doctrines have to be adjusted and reformulated in order to suit needs of a changing society. We cannot doggedly hold fast to these doctrines which correspond to the social realities of an earlier generation far removed from ours. We must rid the law of these anachronistic doctrines and bring it in accord "with the felt necessities of the times". It is interesting to note that in Frys classic work on Specific Performance, contracts of service appear in a small group under the sub-heading "Where enforced performance would be worse than non-performance". We may ask ourselves the question : for whom it would be worse and for whom it would be better. Where, in a country like ours, large numbers of people are unemployed and it is extremely difficult to find employment, an employee who is discharged from service may have to remain without means of subsistence for a long period of time. Damages equivalent to one or two months wages would be poor consolation to him. They would be wholly insufficient to sustain him during the period of unemployment following upon his discharge. The provision for damages for wrongful termination of service was adequate at a time when an employee could without difficulty find other employment within the period of reasonable notice for which damages were given to him. But in conditions prevailing in our country, damages are a poor substitute for reinstatement : they fall far short of the redress which the situation requires. But in conditions prevailing in our country, damages are a poor substitute for reinstatement : they fall far short of the redress which the situation requires. To deny reinstatement to an employee by refusing specific performance in such a case would be to throw him to the mercy of the employer. It would enshrine the power of wealth by recognising the right of the employer to fire an employee by paying him damages which the employer can afford to throw away but which would be no recompense to the employee. It is, therefore, necessary and I venture to suggest, quite possible, within the limits of the doctrine that a contract of personal service cannot be specifically enforced, to take the view that in case of employment under a statutory body or public authority, where there is ordinarily no element of personal relationship, the employee may refuse to accept the repudiation of the contract of employment by the statutory body or public authority and seek reinstatement on the basis that the repudiation is ineffective and the contract is continuing. That is in effect what happened in the case of (McClelland v. Northern Ireland General Health Service Board)8, 1957(1) W.L.R. 594 : 1957(2) All E.R. 129. The plaintiffs contract in this case was really one of master and servant, the only special condition being that her post had been advertised as "permanent and pensionable" and it provided specific reasons, such as gross misconduct and inefficiency, for which she might be dismissed. The defendant Board introduced a rule after her appointment that women employees must resign on marriage and since the plaintiff got married, the respondents terminated her service by giving what they thought was a reasonable notice. The plaintiff contended that the defendant Board was not entitled to terminate her service and claimed a declaration that the purported termination was null and void and she continued in service. The House of Lords held that the contract was exhaustive as regards the reasons for which the defendant-Board could terminate the service of the plaintiff and since none of those reasons admittedly existed, the termination of service of the petitioner by the defendant-Board was nullity and the plaintiff continued in service of the defendant Board. The House of Lords held that the contract was exhaustive as regards the reasons for which the defendant-Board could terminate the service of the plaintiff and since none of those reasons admittedly existed, the termination of service of the petitioner by the defendant-Board was nullity and the plaintiff continued in service of the defendant Board. This was a case of a pure contract of master and servant and yet the House of Lords held that the termination of employment of the plaintiff by the defendant-Board which was not accepted by the plaintiff was ineffective and the plaintiff was entitled to a declaration that she continued in service. It should thus be possible to hold that even if a statutory body or public authority terminates the service of an employee in breach of a contractual obligation, the employee could disregard the termination as ineffective and claim a declaration that his service is continuing. But this would be a somewhat novel and unorthodox ground which has not been recognised by any decision of this Court so far and moreover I do not think that, on facts, this is a proper case in which it would really be applicable and hence I do not propose to finally pronounce upon it. "31. The second category of cases are those where the relationship between the employer and the employee is governed by statute or subordinate legislation, and where such is the case, the termination, which is the same thing as repudiation, may, in a given situation, be null and void and in that event it would not have the effect of putting an end to the contract and the employee would be entitled to a declaration that his service is continuing. The doctrine that a contract of personal service cannot be specifically enforced would not stand in the way of the employee, because the termination being null and void, there being no repudiation at all in the eye of the law, there would be no question of enforcing specific performance of the contract of employment. What the employee would be claiming in such a case is not enforcement of a contract of personal service but declaration of statutory invalidity of an act done by the employer. The case would be of a kind similar to that decided by the Judicial Committee of the Privy Council in (High Commr. for India v. I.M. Lall)9, 74 Ind. What the employee would be claiming in such a case is not enforcement of a contract of personal service but declaration of statutory invalidity of an act done by the employer. The case would be of a kind similar to that decided by the Judicial Committee of the Privy Council in (High Commr. for India v. I.M. Lall)9, 74 Ind. App. 225 : A.I.R. 1948 P.C. 121 the essential feature of which was aptly and succinctly described by this Court in (Dr. S.B. Dutt v. University of Delhi)10, A.I.R. 1958 S.C. 1050 in these words: "That was not a case based on a contract of personal service .... The declaration did not enforce a contract of personal service but proceeded on the basis that the dismissal could only be effected in terms of the statute and as that had not been done, it was a nullity, from which the result followed that the respondent had continued in service. All that the Judicial Committee did in this case was to make a declaration of a statutory invalidity of an Act, which is a thing entirely different from enforcing a contract of personal service." "Where, for example, the termination is outside the powers of a statutory body either because the statutory body has no power to terminate the employment or because the termination is effected in breach of a mandatory obligation imposed by law which prescribes that the termination shall be effected only in a particular manner and no other, it would be a nullity and the employee would be entitled to ignore it and ask for being treated as still in service. Such was the case in (Life Insurance Corporation of India v. Sunil Kumar Mukherjee)11, A.I.R. 1964 S.C. 847, where an order of termination of service of certain employee by the Life Insurance Corporation in breach of Clauses 10(a) and 10(b) of an order passed by the Central Government under section 11(g) of the Life Insurance Corporation Act, 1956; was held to be null and void on the ground that it was not effected in terms of Clauses 10(a) and 10(b) of the Statutory order. So also in (Mafatlal Barol v. Divisional Controller, State Transport, Mehsana)12, A.I.R. 1966 S.C. 1364 this Court held that an order of termination of service passed against the petitioner in contravention of Clause 4(b) of Schedule A to the Regulations made by the State Road Transport Corporation in exercise of powers conferred under section 45 of the Road Transport Corporation Act, 1950 was bad in law and it was quashed by issuing a writ of certiorari. This principle was also approved by this Court in (B.N. Tewari v. District Board, Agra)13, A.I.R. 1964 S.C. 1680 though it was held there, on facts, that the dismissal of the employee was proper and justified. Shah, J., speaking on behalf of this Court in that case recognised this principle and treated it as a third exception to the general rule in the following words : "Under the common law the Court will not ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ. But this rule is subject to certain well-recognised exceptions. It is open to the courts in an appropriate case to declare that a public servant who is dismissed from service in contravention of Article 311 continues to remain in service, even though by so doing the State is in effect forced to continue to employ the servant whom it does not desire to employ. Similarly under the industrial law jurisdiction of the labour and industrial tribunals to compel the employer to employ a worker whom he does not desire to employ, is recognised. The courts are also invested with the power to declare invalid the act of a statutory body, if by doing the act the body has acted in breach of a mandatory obligation imposed by statute, even if by making the declaration the body is compelled to do something which it does not desire to do." This position in law was reiterated by this Court in U.P. State Warehousing Corporation v. C.K. Tyagi, 1970(2) S.C.R. 250 : A.I.R. 1970 S.C. 1244, where, after referring to Dr. Dutts case and S.R. Tewaris case, Vaidialingam, J., observed : "From the two decisions of this Court referred to above, the position in law is that no declaration to enforce a contract of personal service will be normally granted. Dutts case and S.R. Tewaris case, Vaidialingam, J., observed : "From the two decisions of this Court referred to above, the position in law is that no declaration to enforce a contract of personal service will be normally granted. But there are certain well-recognised exceptions to this rule and they are : To grant such a declaration in appropriate cases regarding (1) a public servant, who has been dismissed from service in contravention of Article 311, (2) Reinstatement of a dismissed worker under Industrial Law or Labour or Industrial Tribunals, (3) A statutory body when it has acted in breach of a mandatory obligation, imposed by statute." This statement of law was reaffirmed again by this Court in (Indian Airlines Corporation v. Sukhdeo Rai)14, 1971 Supp. S.C.R. 510 : A.I.R. 1971 S.C. 1828 and (Bank of Baroda v. Jiwan Lal Mehrotra)15, 1970(2) Lab. L.J. 54 (S.C.)." 12. Mr. Singhvi has next relied upon the case of Central Inland Water Transport Corporation Ltd. and another v. Brojo Nath Ganguly and another and Central Inland Water Transport Corporation Ltd. and another v. Tarun Kanti Sengupta and another, A.I.R. 1986 Supreme Court 1571, where it is observed as under : "98. Rule 9(i) confers upon the Corporation the power to terminate the service of a permanent employee by giving him three months notice in writing or in lieu thereof to pay him the equivalent of three months basic pay and dearness allowance. A similar regulation framed by the West Bengal State Electricity Board was described by this Court in (West Bengal State Electricity Board v. Desh Bandhu Ghosh)16, 1985(3) S.C.C. 116 : A.I.R. 1985 S.C. 722 at page 118 of S.C.C. : (at P. 723 of A.I.R.) as : ".....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 clause so familiar to administrative lawyers." As all lawyers may not be familiar with administrative law, we may as well explain that "the Henry VIII clause" is a provision occasionally found in legislation conferring delegated legislative power, giving the delegate the power to amend the delegating Act in order to bring that Act into full operation or otherwise by Order to remove any difficulty, and at times giving power to modify the provisions of other Acts also. The Committee on Ministers Powers in its report submitted in 1932 (Cmd. 4060) pointed out that such a provision had been nicknamed "the Henry VIII clause" because "that King is regarded popularly as the impersonation of executive autocracy". The Committees Report (at page 61) criticised these clauses as a temptation to slipshod work in the preparation of bills and recommended that such provisions should be used only where they were justified before Parliament on compelling grounds. Legislation enacted by Parliament in the United Kingdom after 1932 does not show that this recommendation had any particular effect. "99. No chapter description of Rule 9(i) can be given than to call it "the Henry VIII Clause". It confers absolute and arbitrary power upon the Corporation. It does not even state who on behalf of the Corporation is to exercise that power. It was submitted on behalf of the Appellants that it would be the Board of Directors. The impugned letters of termination, however, do not refer to any resolution or decision of the Board and even if they did, it would be irrelevant to the validity of Rule 9(i). There are no guidelines whatever laid down to indicate in what circumstances the power given by Rule 9(i) is to be exercised by the Corporation. No opportunity whatever of a hearing is at all to be afforded to the permanent employee whose service is being terminated in the exercise of the power. It was urged that the Board of Directors would not exercise this power arbitrarily or capriciously as it consists of responsible and highly placed persons. This submission ignores the fact that however highly placed a person may be, he must necessarily possess human frailties. It also overlooks the well-known saying of Lord Acton, which has now almost become a maxim, in the Appendix to his "Historical Essays and Studies", that "power tends to corrupt, and absolute power corrupts absolutely." As we have pointed out earlier, the said Rules provide for four different modes in which the services of a permanent employee can be terminated earlier than his attaining the age of superanuation, namely, Rule 9(i), Rule 9(ii), sub-clause (iv) of Clause (b) of Rule 36 read with Rule 38 and Rule 37. Under Rule 9(ii) the termination of service is to be on the ground of "services no longer required in the interest of the Company". Under Rule 9(ii) the termination of service is to be on the ground of "services no longer required in the interest of the Company". Sub-clause (iv) of Clause (v) of Rule 36 read with Rule 38 provides for dismissal on the ground of misconduct. Rule 37 provides for termination of service at any time without any notice if the employee is found guilty of any of the acts mentioned in that Rule. Rule 9(i) is the only Rule which does not state in what circumstances the power conferred by that Rule is to be exercised. Thus, even where the Corporation could proceed under Rule 36 and dismiss an employee on ground of misconduct after holding a regular disciplinary enquiry, it is free to resort instead to Rule 9(i) in order to avoid the hustle of an inquiry. Rule 9(i) thus confers an absolute, arbitrary and unguided power upon the Corporation. It violates one of the two great rules of natural justice - the audi alteram partem rule. ... ... ... ... ... ... "100.The power conferred by Rule 9(i) is not only arbitrary but is also discriminatory for it enables the Corporation to discriminate between employee and employee. It can pick up one employee and apply to him Clause (i) of Rule 9. It can pick up another employee and apply to him Clause (ii) of Rule 9. It can pick up yet another employee and apply to him sub-clause (iv) of Clause (b) of Rule 36 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 holding under Rule 38 a regular disciplinary inquiry into the alleged misconduct of the employee. Both the contesting respondents had, in fact, been asked to submit their explanation to the charges made against them. Sengupta had been informed that a disciplinary inquiry was proposed to be held in his case. The charges made against both the respondents were such that a disciplinary inquiry could easily have been held. It was, however, not held but instead resort was had to Rule 9(i). "101.The Corporation is a large organization. It has offices in various parts of West Bengal, Bihar and Assam, as shown by the said Rules, and possibly in other States also. It was, however, not held but instead resort was had to Rule 9(i). "101.The Corporation is a large organization. It has offices in various parts of West Bengal, Bihar and Assam, as shown by the said Rules, and possibly in other States also. The said Rules form part of the contract of employment between the Corporation and its employees who are not workmen. These employees had no powerful workmens Union to support them. They had no choice but to accept the said Rules as part of their contract of employment. There is gross disparity between the Corporation and its employees, whether they be workmen or officers. The Corporation can afford to dispense with the services of an officer. It will find hundreds of others to take his place but an officer cannot afford to lose his job because if he does so, there are not hundreds of jobs waiting for him. A clause such as Clause (i) of Rule 9 is against right and reason. It is wholly unconscionable. It has been entered into between parties between whom there is gross inequality of bargaining power. Rule 9(i) is a term of the contract between the Corporation and all its officers. It affects a large number of persons and it squarely falls within the principle formulated by us above. Several statutory authorities have a clause similar to Rule 9(i) in their contracts of employment. As appears from the decided cases, the West Bengal State Electricity Board and Air India International have it. Several Government companies apart from the Corporation (which is the First Appellant before us) must be having it. There are 970 Government companies with paid-up capital of Rs. 16,414.9 crores as stated in the written arguments submitted on behalf of the Union of India. The Government and its agencies and instrumentalities constitute the largest employer in the country. A clause such as Rule 9(i) in a contract of employment affecting large sections of the public is harmful and injurious to the public interest for it tends to create a sense of insecurity in the minds of those to whom it applies and consequently it is against public good. Such a clause, therefore, is opposed to public policy and being opposed to public policy, it is void under section 23 of the Indian Contract Act." 13. Mr. Such a clause, therefore, is opposed to public policy and being opposed to public policy, it is void under section 23 of the Indian Contract Act." 13. Mr. Singhvi has further placed reliance on the case of (Delhi Transport Corporation v. D.T.C. Mazdoor Congress and others)17, A.I.R. 1991 Supreme Court 101. He has relied upon the concurrent judgment of Justice Ramaswamy, J. This is what has been observed : "242.It must, therefore, be held that a permanent employee of a statutory authority, corporation or instrumentality under Article 12 has a 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 enures 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 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. "243.How to angulate the effect of termination of service. "Law is a social engineering to remove the existing imbalance and to further the progress, serving the needs of the Socialist Democratic Bharat under rule of law. The prevailing social conditions and actualities of life are to be taken into account to adjudging whether the impugned legislation would subserve the purpose of the society. The arbitrary, unbridled and naked power of wide discretion to dismiss a permanent employee without any guidelines or procedure would tend to defeat the constitutional purpose of equality and allied purposes referred to above. Courts would take note of actualities of life that persons actuated to corrupt practices are capable, to manouver with higher echelons in diverse ways and also camouflage their activities by becoming sycophants or chronies to the superior officers. Sincere, honest and devoted subordinate officer (are) unlikely to lick the boots of the corrupt superior officer. They develop a sense of self-pride for their honesty, integrity and apathy and inertia towards the corrupt and tend to undermine or show signs of disrespect or disregard towards them. Sincere, honest and devoted subordinate officer (are) unlikely to lick the boots of the corrupt superior officer. They develop a sense of self-pride for their honesty, integrity and apathy and inertia towards the corrupt and tend to undermine or show signs of disrespect or disregard towards them. Thereby, they not only become inconvenient to the corrupt officer but also stand an impediment to the on-going smooth siphony of corruption 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 capable to be applied in diverse circumstances. If a superior officer develops likes towards sycophant, though corrupt, he would tolerate him and found him to be efficient and pay encomiums 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 not up to 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 unbridled 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 particular, when the bribe of officers of honesty, integrity 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 societys interest to accord such officers security of service and avenues of promotion. "That apart, the haunting fear of dismissal from service at the vagary of the concerned officer would dry up all springs of idealism of the employee and in the process coarsens the conscience and degrades his spirit. it is the societys interest to accord such officers security of service and avenues of promotion. "That apart, the haunting fear of dismissal from service at the vagary of the concerned officer would dry up all springs of idealism of the employee and in 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 fear haunts a man, happiness vanishes. Where fear is, justice cannot be, where fear is, freedom cannot be. There is always a craving in the human heart 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 satisfaction 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 Constitution 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 capricious use of those powers." "Contract of service must be consistent with the Constitution." "244.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 of the instrumentality or the authority under Article 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 an opportunity of show cause of proposed order of termination of the service. The Indian Contract Act, 1872 operating in British India was extended to the merged States in 1949 1950 except to the State of Jammu Kashmir. Therefore, after Bharat attained independence on August 15, 1947, the Indian Contract Act is applicable to all States except 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.)18, 43 Ind. App. 164 : A.I.R. 1916 P.C. 7. 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.)18, 43 Ind. App. 164 : A.I.R. 1916 P.C. 7. Thereby common law principles applicable in England, if they are inconsistent with the provisions of the Indian Contract Act or the Constitution to that extent they stand excluded. Any law, much less the provisions of Contract Act, are inconsistent with the fundamental rights which guaranteed in Part III of the Constitution, by operation of Article 13 of the Constitution, are void. Section 2(h) of the Indian Contract Act defines "an agreement" including an agreement of service and becomes a contract only when it is enforceable by law. If it is not enforceable it would be void by reason of section 2(g) thereof. The question, therefore, is whether the contract of service of Regulation 9(b) in derogation to the Fundamental Rights guaranteed in Part III of the Constitution, is valid in law and would be enforceable." "Contract whether changeable with changing times." 245.The law of contract, like the legal system itself, involves a balance between competing sets of values. Freedom of contract emphasises the need of stability, certainty and predictability. But, important as is values are, they are not absolute, and there comes a point where they "face serious challenge" against them must be set the values of protecting the weak, oppressed and the thoughtless from imposition and oppressed. Naturally, at a particular time, one set of value tends to be emphasised at the expense of the other as the time changes the values get changed and the old values are under replacement and new values take their due place. Naturally, at a particular time, one set of value tends to be emphasised at the expense of the other as the time changes the 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 by the citizens and their relations when encounter with the State or its instrumentalities are in conflict with the assured constitutional rights demand new values and begin to assert themselves, for no civilised system of law can accept the implications of absolute sanctity of contractual obligations and of their immutability." "In paragraph 4 of the Chitty on Contracts (25th Edition, Volume-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 the large". "In Ansons Law of Contract at pp. 6 7 stated the scope of freedom of contract in the changing circumstances thus : "Today the position is seen in a very different light. 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 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 realised that economic equality often does not exists in any real sense, and that individual interest have to be 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 statutes designated to ensure that the employees conditions 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. 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 override 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 safeguard the interests of consumers. This intervention is 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." The `standard form contract is the rule. He must either accept the terms of this contract in to, or go without, Since, however, it is not feasible to deprive oneself 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." "246.The trinity of the Constitution assures 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 contract and interposed by making statutory law like Rent Acts, Debt 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 egalitarian socialist order. This Court, as a Court of constitutional conscience enjoined and is jealously to project and uphold new values in establishing 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 unconscionable rules or conditions when the citizen is really unable to meet on equal terms with the State. As a Court of constitutional functionary exercising equity jurisdiction, this Court would relieve the weaker parties from unconstitutional contractual obligations, unjust, unfair, oppressive and unconscionable 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 to be so, this Court would not shirk to avoid the contract by appropriate declaration. Therefore, though certainty is an important value in normal commercial contract law, it is not an absolute and immutable one but is subject to change in the changing social conditions". 14. In my view, neither of the cases relied upon by Mr. Singhvi will bail out the plaintiff from the position where he has landed himself. As far as the case of "Nandganj Sihori Sugar Co. Ltd.", A.I.R. 1991 S.C. 1525 (supra) is concerned, the plaintiff, in that case had sought enforcement of a contract alleged to have been entered into between him and the defendant Nos. 1 and 2 who were officers of the Sugar Company under which he claimed to be appointed to a certain post. The plaintiff contended that he had been sponsored by the Chairman and Managing Director of the third defendant - the U.P. State Sugar Corporation Ltd. - in terms of a scheme formulated by the Government of India. The defendants resisted the claim by stating that there was no contract as alleged and there was no vacancy for the post claimed. They contended that the plaintiff was not qualified to be appointed. In this context, it was observed by the Supreme Court : ".....In the first place, the letters sent by the Chairman of the holding company (defendant No. 3) are merely in the 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. 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." 15. It is in the aforesaid controversy, that the Supreme Court has made the observations which are reproduced in the earlier paras of this judgment. If the observations are read in the proper context, the same would go counter to the submissions sought to be advanced by Mr. Singhvi viz., that a contract of personal services can be specifically enforced and a Court can and would be justified in giving a declaration that the contract subsists and the employee even after having been removed from service can be deemed to be in service. 16. As far as the case of Executive Committee of Vaish Degree College, Shamli others v. Lakshmi Narain others, A.I.R. 1976 S.C. 888, (supra) is concerned, the termination of the services of Principal of the College was brought about by the Executive Committee of the College, who used to manage the affairs of the college. The said college was affiliated to the Agra University and as a consequence the college agreed to be governed by the provisions of the Agra University Act and the statutes and ordinances made thereunder. The plaintiff was appointed as Principal of the college on permanent basis and his appointment as Principal was formerly approved by the Vice Chancellor of the Agra University. Two years later differences arose between the Executive Committee of the college and the plaintiff resulting in allegations and counter allegations being levelled and culminating in a notice being served by the Executive Committee on the plaintiff directing him not to discharge the duties of the Principal. This was followed on by a counter notice by the plaintiff to the Executive Committee that the notice sent to him was illegal. This was followed on by a counter notice by the plaintiff to the Executive Committee that the notice sent to him was illegal. The Executive Committee, by a resolution, terminated the services of the plaintiff. The plaintiff, in the meanwhile, filed a suit giving rise to the appeal before the Supreme Court. 17. The plaintiffs case was that on being affiliated to the University and by adopting the provisions of the Acts and the Statutes of the University, the college became a statutory body and had no jurisdiction to terminate the services of the plaintiff without seeking the previous approval of the Vice Chancellor. The plaintiff further submitted that after his appointment, he entered into an agreement with the Executive Committee in accordance with the Statutes of the University and the college was bound by the terms and provisions of the Statutes under which his services could not be terminated without the previous approval of the Vice-Chancellor. The plaintiff, therefore, contended that his removal from service was without jurisdiction and he must be deemed to have continued in service. The plaintiff accordingly prayed for an injunction restraining the defendants from interfering with his duties as the Principal of the College. 18. The defence was that the Executive Committee was not a statutory body and, therefore, was not bound by the statutes and the provisions of the University Acts. In answer to the question, as to whether or not the Executive Committee could be said to be a statutory body, this is what the Supreme Court has observed : ".....It seems to us that before an institution can be a statutory body it must be created by or under the statute and own its existence to a statute. This must be the primary thing which has got to be established. Here a distinction must be made between an institution which is not created by or under a statute but is governed by certain statutory provisions for the proper maintenance and administration of the institution. There have been a number of institutions which though not created by or under any statute have adopted certain statutory provisions, but that by itself is not, in our opinion, sufficient to cloth the institution with a statutory character. In (Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi)19, A.I.R. 1975 S.C. 1331 at p. 1339 this Court clearly pointed out as to what constitutes a statutory body. In (Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi)19, A.I.R. 1975 S.C. 1331 at p. 1339 this Court clearly pointed out as to what constitutes a statutory body. In this connection my Lord A.N. Ray, C.J., observed as follows : "A company incorporated under the Companies Act is not created by the Companies Act but comes into existence in accordance with the provisions of the Act. It is not a statutory body because it is not created by the Statute. It is a body created in accordance with the provisions of the statute." It is, therefore, clear that there is a well marked distinction between a body which is created by the statute and a body which after having come into existence is governed in accordance with the provisions of the statute. In other words the position seems to be that the institution concerned must own its very existence to a statute which would be the fountain head of its powers. The question in such cases to be asked is, if there is no statute would the institution have any legal existence.