LOKESHWAR PRASAD ( 1 ) THE petitioner has filed the present writ petition under Article 226 of the Constitution of India assailing letter dated the 8th February, 1983 and 19th February, 1983, both issued by Government of India. Ministry of Energy, Department of Coal. cornveying the termination of the services of the petitioner as Chairman-cum-Managing Director, Central Coalfields Limited with immediate effect ( 2 ) THE facts relevant for the disposal of the above mentioned writ petition briefly stated are that the petitioner joined the National Coal Development Corporation Limited, Ranchi (hereinafter REFERRED TO to as the NCDC ) in 1963 and worked as its Chief Personnel Officer until 1965. He, thereafter, from 1965 to 4th December, 1970 worked as Industrial Relation Adviser in the Fertiliser Corporation of India From 4,12 1970 to 1973, the petitioner worked as Director (Administration) in the NCDC While working in the above capacity with the NCDC, the petitioner had a lien on the post of Industrial Relation Adviser in the Fertiliser Corporation of India till 17. 3. 1972. on which date he was permanently absorbed in the NC DC. On 9. 7. 1973, the petitioners as appointed as Director (Personnel and Industrial Relations) in Coal Mines Authority Limited. On 11. 2. 1974, the petitioner was appointed as Director of NCDC and on 4. 11. 1974 he was appointed as Managing Director of NCDC. In the year 1975, the Coal Mines Authority Limited was re-named as Coal India Limited and the NCDC was re-named as Central Coal fields Limited and the petitioner was appointed as the Director of Central Coalfields Limited on 4. 111975 vide letter dated 13. 11. 1975. 2. 2 On 10. 11. 1977, the petitioner was transferred as Chairman-cum-Managing Director of Bharat Cooking Coal Limited, a subsidiary of Coal India Limited and his tenure was extended for three years w. e. f. 9. 7. 1978 vide letter dated 10. 8. 1978. In January, 1978, for about three weeks, the petitioner was working as Consultant Coal India Limited at New Delhi. On 27. 1 79, the petitioner was transferred back as Chairman-cum-Managing Director of the Central Coalfields Limited. On 8. 4. 82. the petitioner, as per the averments contained in the petition, was given the additional charge as Chairman-cum-Managing Director of Coal India Limited vide letter dated 17. 4. 82 until 22. 11. 82, the date on which Sh. On 27. 1 79, the petitioner was transferred back as Chairman-cum-Managing Director of the Central Coalfields Limited. On 8. 4. 82. the petitioner, as per the averments contained in the petition, was given the additional charge as Chairman-cum-Managing Director of Coal India Limited vide letter dated 17. 4. 82 until 22. 11. 82, the date on which Sh. S. R. Jain was appointed as Chairman-cum-Managing Director of Coal India Limited. 2. 3 On the expiry of the tenure of the petitioner in July, 1981 as Chairman-cum-Managing Director. Central Coalfields Limited, the petitioner was given a further tenure of two years which was to expire in July, 1983. However, vide impugned orders, it is alleged that the services of the petitioner were illegally terminated on 8. 2. 83 with malafide motives and on irrcle ant and extraneous considerations. 2. 4 It is alleged that all along the service record of the petitioner had been outstanding. His work had been appreciated by the Union Minister for Energy and Union Minister for Finance During the period, the petitioner was the C. M. D. of Central Coalfields Limited. The performance of the above said concern had improved phenomenally, the production of Coal increased and the profits of the above said concern also increased considerably. It is alleged that the petitioner was even recommended for the award of padma Vibhushan by respondent No. 4. 2. 5 It is further alleged that respondent No. 4 on 6. 11 80 had even sent a telex to the petitioner commending the good work done by him. The work of the petitioner, as per his averments, was commended even by the then Prime Minister, who wrote a letter dated 18. 2. 82 to Sh. Anand Gopal Mukerjee, a Member of Parliament stating that the petitioner was one of the best officers and had done excellent service to the Coal Sector. 2. 6 The petitioner, it is alleged, had taken drastic steps to root out corruption and with the above object in view evolved a new Scheme known as "off-the-shelf Sale Scheme" making over 10 million tonnes of Coal on free sale and banning the issue of adhoc delivery orders of coal to the traders and middle man. 2. 7 Certain issues relating to coal. figured in the Parliamentary proceedings and on 20. 4. 2. 7 Certain issues relating to coal. figured in the Parliamentary proceedings and on 20. 4. 82, several Members of Parliament, who, it is alleged, were involved in the issue of ad hoc release of coal and who were having prior information that the new Scheme, banning ad hoc release of coal. was coming shortly, asked for an inquiry against the petitioner on the ground that he was corrupt However. no specific complaint was given. The Speaker of the Lok Sabha ruled that the Minister would make an inquiry. It is alleged that respondent No. 5. who at the relevant time was the Minister of State for Coal in the Department of Coal obtained complaints from different persons against the petitioner. It is further alleged that on 20. 4. 82, the petitioner was asked by respondent No. 5 to amend the new Scheme so as to accommodate the cases for ad hoc releases which were to be recommended by the Ministers. However. the above move was resisted by the petitioner and the Scheme, as originally envisaged was launched on 17. 5. 82 without the approval of the Minister of State. 2. 8 On 16. 4. 82, the Public Enterprises Selection Board interviewed all the eligible candidates for the post of Chairman-cum-Managing Director, Coal India Limited for the purpose of selecting a regular incumbant and the petitioner was unanimously found as the only suitable candidate. On or around 25. 4. 82, the Secretary, Coal, Government of India, wrote to the Chairman of Public Enterprises Selection Board for the finalisation of the proceedings in terms of the above said interview held on 16. 4. 82. Around 25. 4. 82, respondent No. 5 wrote a D. O. letter to the Chairman Public Enterprises Selection Board recommending that Sh. S. R. Jain, Chairman and Managing Director. Heavy Engineer- ing Corporation Ranchi be also called for interview and the Chairman of the Public Enterprises Selection Board called Sh. Jain and other persons for interview on 31. 7. 82. However. Sh. Jain did not appear for interview and the Board did not find any suitable candidate and the Chairman of the Board on August 2, 1982 conveyed recommendations of the Board to the Department of Coal that the petitioner was the only suitable candidate out of the candidates interviewd on 16. 4. 82. 31. 7. 82 and 2. 8. 82. Sh. Jain did not appear for interview and the Board did not find any suitable candidate and the Chairman of the Board on August 2, 1982 conveyed recommendations of the Board to the Department of Coal that the petitioner was the only suitable candidate out of the candidates interviewd on 16. 4. 82. 31. 7. 82 and 2. 8. 82. Vigilance clearance in respect of the petitioner was obtained. It is alleged that thereafter said Sh. S. R. Jain alone was called for interview by the Board on 28 8. 82 and the Board it appears revised its recommendations and placed three candidates on the panel. Thereafter, the Secretary Ministry of Energy, Department of Coal, recommended the name of the petitioner from the panel for approval of the appointment of the petitioner by the Appointment Committee of Cabinet. 2. 10 However, on 15. 8. 82, respondent No. 4 Sh. Gani Khan Chawdhary asked the petitioner to appoint 25 persons each from Maida, the constituency of the Minister in Coal India Limited and each of its subsidiary companies. It is averred by the petitioner that the petitioner expressed his inability as the recruitment in the unskilled and clerical cadre had been banned by the Government and Coal India Limited and its subsidiaries already had large number of surplus employees in the abovesaid cadres. It is alleged that respondent No. 4. who was on tour at Calcutta on that date expressed his annoyance and called the C. M. D. of Bharat Cooking Limited from Dhanbad and asked him to appoint the 25 persons as per the list handed over to him. The Chairman-cum-Managing Director of Bharat Cooking Coal Limited issued 25 appointment letters at Calcutta itself in total violation of the recruitment policy and procedure on the same day though the letters were dated 14. 8. 82. 2. 11 Some-time around September. 1982, there was re-shuffle in the Union Cabinet and Sh. N. D. Tiwari. Minister of Industry was given the charge of the Ministry of Energy also. After a few days. again there was re-shuffle in the Union Cabinet and the charge of the Ministry of Energy was given to Sh. Shiv Shankar. It is alleged that soon after the assumption of office by Sh. N. D. Tiwari. Minister of Industry was given the charge of the Ministry of Energy also. After a few days. again there was re-shuffle in the Union Cabinet and the charge of the Ministry of Energy was given to Sh. Shiv Shankar. It is alleged that soon after the assumption of office by Sh. Shiv Shankar as Minister of Energy the Minister of State took the file relating to the appointment of Chairman, Coal India Limited to him (Shri Shiv Shankar) and recommended that Shri S. R Jain be appointed as Chairman, Coal India Limited as he knew that Shri Jain was a competent officer. It is alleged that Shri Gargi Shankar Misra (respondent No. 5) made the above representation to Shri Shiv Shankar though Shri Misra (respondent No. 5 never had the opportunity to assess the performance of Shri Jain as Shri Jam never worked with Shri Misra (respondent No. 5 ). The Union Minister for Energy yielded to the above persuasion of Shri Misra. The petitioner having come to know the above facts met the Union Minister for Energy and protested and was assured that an equivalent post would be given to him and that his non appointment did not reflect on his competence or career. A note for the approval of the Appointment Committee of the Cabinet was made in regard to appointment of Sh, Jain and the papers were submitted to the Prime Minister and the Prime Minister in November. 1982 approved the name of Sh. S. R. Jain and Sh. S. R. Jain assumed the charge as Chairman cum Managing Director of Coal India, Limited on 22. 11. 82. 2. 12 It is alleged that in December, 1982 a proposal was mooted by the then Finance Minister that the petitioner should be posted as C. M. D. Coal India Limited at Calcutta. In January. 1983. the Home Minister addressed a communication to the Prime Minister, referring to the communication of the Finance Minister expressing the view that petitioner may be considered for appointment as Chairman sail or be considered for the post of Chairman Coal India Limited. In case the above proposal w as not approved, the petitioner may be appointed as Additional Secretary, Ministry of Energy, Department of Coal. The above view was endorsed by the Union Minister of Energy vide endorsement dated 6. 1. 83. 2. 13 However, on 8. 2. In case the above proposal w as not approved, the petitioner may be appointed as Additional Secretary, Ministry of Energy, Department of Coal. The above view was endorsed by the Union Minister of Energy vide endorsement dated 6. 1. 83. 2. 13 However, on 8. 2. 83, the letter of termination of the services of the petitioner as CMD Central Coalfields Limited was issued, w hich w as sent on him on 10. 2. 8 3. The petitioner on 10. 2. 8 3 itself w rote a letter to Deputy Secretary Coal, Ministry of Energy, that he would automatically revert to the post of Director (Administration) on w hich he had been permanently absorbed in March, 1982 and on w hich post he had a lien. The petitioner was sent a communication by the Deputy Secretary to the Gop\t. of India, Ministry of Energy, Department of Coal dated the 19th February, 1983 stating that the petitioner had ceased to have any claim on any post in the organisation and the cheque for Rs. 15. 000. 00 as pay in lieu of 3 month s notice was returned to the petitioner. The petitioner vide letter dated 15. 3. 83 addressed to the Deputy Secretary in the Ministry of Energy again re-iterated his earlier contention that he accepted the cheque under protest and without prejudice to his claims. The petitioner as per his averments thereafter has made various representations to various functionaries, but he has not received any reply and hence the petition. 2. 14 The petitioner has assailed the impugned communications of termination of his services on grounds of malafides and on the ground that there was no material before the Govt. on the basis of which the above said impugned communications could have been issued; that the petitioner has been dismissed from the post of C. M. D Central Coalfields Limited without any inquiry, without informing him of any charge against him and there has been complete breach and violation ofthe constitutional guarantee given by Article 311 ofthe Constitution of India. In substance, it is stated that action taken by the respondents in terminating the services ofthe petitioner is bad in law, arbitrary, motivated by malafidies and extraneous considerations and, therefore, deserves to be quashed. 2. 15 The petitioner in the present petition has prayed - a) that a writ in the nature of mandamus or any other appropriate writ. In substance, it is stated that action taken by the respondents in terminating the services ofthe petitioner is bad in law, arbitrary, motivated by malafidies and extraneous considerations and, therefore, deserves to be quashed. 2. 15 The petitioner in the present petition has prayed - a) that a writ in the nature of mandamus or any other appropriate writ. direction or order to the respondents to withdraw and cancel the impugned communications dated the 8. 2. 1983 and 19. 2. 1983 be issued; b) , that the orders and/or sanction, if any. of the President of India on the basis of which the impugned communications dated the 8. 2. 83 and 19. 2. 83 have been issued be withdrawn, recalled and cancelled; c) that the respondents be restrained from interfering with petitioner s function- ing in the respondent No. 3 company and discharge his duties; d) that a writ in the nature of certiorari or any other appropriate writ or direction or order directing the respondents to produce all the records pertaining to the service of the petitioner in the Govt. of India, in respondent No. 3 and all records pertaining to the selection of Chairman, Coal India Limited by the Public Enterprises Selection Board and the records of the Appointments Committee of Cabinet and the records maintained in the office of the Prime Minister in connection with the above said selection be directed to be produced in the Court; e) that a writ in the nature ofcertiorari or any other appropriate writ or direction or order directing the respondents to produce before this Court all the records relating to the issue of impugned communications dated the 8. 2. 83 and 19. 2. 83 and orders and/ or sanction, if any, of the President of India in connection there with be issued; i) that a writ in the nature of prohibition or any other appropriate writ, direction or order prohibiting, the respondents from giving effect to the impugned communications dated the 8. 2. 83 and 19. 2. 2. 83 and 19. 2. 83 and orders and/ or sanction, if any, of the President of India in connection there with be issued; i) that a writ in the nature of prohibition or any other appropriate writ, direction or order prohibiting, the respondents from giving effect to the impugned communications dated the 8. 2. 83 and 19. 2. 83 be issued; g) that any other appropriate writ, direction or order directing the respondents to re-instate the petitioner to the post of Chairman-cum-Managing Director Central Coalfields Limited, the post which the petitioner was holding at the time of termination of services be issued; h) that an appropriate writ, direction or order for the production of all the elevant records as would give relief to the petitioner m the facts and circumstances of the case be issued; i) that rule nisi in terms of the above prayers be issued; and j) that such further orders as the nature and circumstances of the case may require be passed by this Court. ( 3 ) ON behalf of respondent No. 1 (Union of India through the Secretary, Ministry of Energy, Department of Coal, Shastri Bhawan, New Delhi), respondent No. 2 (Deputy Secretary to the Govt. of India, Ministry of Energy, Department of Coal, Shastri Bhawan, New Delhi), a joint counter has been filed by Sh. T. C. A. Srinivasan, the then Director, working in the Ministry of Steel, Mines, Coal (Department of Coal) in the Government of India. On behalf of respondent No. 3, a separate counter has been filed by Sh. R. K. Mehta, General Manager (Administration), Central Coalfields Limited, Darbangha House, Ranchi. No counter has been filed on behalf of respondent No. 4 (Sh. A. B A Gani Khan Chawdhary) and on behalf of respondent No. 5 (Sh. Gargi Shankar Mishra ). On behalf of respondent No. 6 (Coal India Limited), a separate counter has been filed by Sh. J. D. Purohit, Deputy Legal Manager, Coal India Limited, Calcutta. 3. No counter has been filed on behalf of respondent No. 4 (Sh. A. B A Gani Khan Chawdhary) and on behalf of respondent No. 5 (Sh. Gargi Shankar Mishra ). On behalf of respondent No. 6 (Coal India Limited), a separate counter has been filed by Sh. J. D. Purohit, Deputy Legal Manager, Coal India Limited, Calcutta. 3. 2 Though, as already stated, a joint counter affidavit has been filed on behalf of respondent No. 1 and 2 and separate counter affidavits have been filed 6n behalf of respondents 3 and 6, but the fact remains that the main thrust in the reply affidavits, filed on behalf of the above said respondents, is that the services of the petitioner as Chairman-cum-Managing Director of Central Coalfields Limited (respondent No. 3) have been terminated in terms of his contract of service and no constitutional or legal right of the petitioner has been violated in any manner whatsoever. The above said respondents in their counter affidavits have also contended that the impugned communications terminating the services of the petitioner as Chairman-cum-Managing Director of respondent No. 3 were neither arbitrary nor illegal nor based on malafidies as alleged. According to them. the services of the petitioner in terms of his contract of service were terminated vide above mentioned communications and that the petitioner has no cause of action and the petition filed by the petitioner is devoid of substance and the same, therefore, deserves to be dismissed. 3. 3 We have heard the petitioner and the learned counsel for the respondents at length and have also carefully gone through the written submissions filed by the petitioner. The petitioner, w ho appeared in person, argued his own case himself. It was submitted by him that right to livelihood is a part of right to life and right to life includes, right to live with dignity. free from exploitation. He submitted that the impugned action on the part of the respondents is arbitrary, illegal, based on malafidies and is, therefore, unsustainable in law. He further submitted that as a result of the impugned action of the respondents he has been subjected to harassment, humiliation, loss of employment and loss of reputation and that for all this he deserves to be suitably compensated. In support of his above submissions the petitioner has placed reliance on a number of decisions - Olga Tellis and Ors. He further submitted that as a result of the impugned action of the respondents he has been subjected to harassment, humiliation, loss of employment and loss of reputation and that for all this he deserves to be suitably compensated. In support of his above submissions the petitioner has placed reliance on a number of decisions - Olga Tellis and Ors. Vs Bombay Municipal Corporation and Ors, ( AIR 1986 SC 180 ) Bandhua Mukti Morcha Vs. Union of India and Ors. ( AIR 1984 SC 802 ), Sunil Batra Vs. Delhi Administration ( AIR 1980 SC 1579 ). Sebastian M. Hongray Vs. Union of India ( AIR 1984 SC 1026 ). S. Partap Singh Vs. State of Punjab ( AIR 1964 SC 72 ). C. S. Rowjee and Ors. Vs. The State of Andhra Pradesh and Ors. ( AIR 1964 SC 962 ). Rudul Sah Vs. State of Bihar and another (1983) 4 SCC 141 . Bhim Singh Vs. State of J and K and Ors. (1985) 4 SCC 677 , Ajay Hasia etc. Vs. Khalid Mujib Sehravardi and Ors. ( AIR 1981 SC 487 ), Executive Committee of Vaish Degree College, Shamli and Ors. Vs. Lakshmi Narain and. Ors. (1976) 2 SCC SS. Arya Vidya Sabha, Kashi and another Vs. Krishna Kumar Srivastava and another (1976) 3 SCC "83 and The Managing Director, U. P. Warehousing Corporation and Ors. Vs. Vijay Narayan Vajpayee ( AIR 1980 SC 840 . 3. 4 The learned counsel for the respondents on the other hand submitted that the termination of the services of the petitioner as Chairman-cum-Managing Director of Central Coalfields Limited (respondent No. 3) by the respondents vide impugned communications is in conformity with the contract of service of the petitioner with the respondents and there is nothing illegal or arbitrary in the same and no malafidies are involved therein. It was submitted by the learned counsel for the respondents that the petitioner is not entitled to any of the reliefs claimed by him and the petition, filed by the petitioner, deserves to be dismissed with costs. ( 4 ) UPON the pleadings of the parties, we have formulated the following questions, which, in our opinion, arise for decision in the present writ petition:- "i) whether the Central Coalfields Limited (respondent No. 3) is a state , within the meaning of Article 12 of the Constitution? ( 4 ) UPON the pleadings of the parties, we have formulated the following questions, which, in our opinion, arise for decision in the present writ petition:- "i) whether the Central Coalfields Limited (respondent No. 3) is a state , within the meaning of Article 12 of the Constitution? ii) whether the petitioner, while functioning as Chairman-cum-Managing Director of the Central Coalfields Limited (respondent No. 3) held a civil post within the meaning of Article 310 and 311 of the Constitution of India?. iii) whether the impugned communications dated the 8. 2. 83 and 19. 2. 83, issued by the Govt. of India. Ministry of Energy (Department of Coal) (Annexure - A) are orders of termination of services simplicitor or the same are illegal arbitrary and arc based on malafidies as alleged by the petitioner? iv) whether the petitioner, even after the termination of his services as Chairman-cum-Managing Director of Central Coalfields Limited (respondent No. 3) vide impugned communications dated the 8. 2. 83 and 19. 2. 83, continued to have his lien" on the post of Director Administration) of Central Coalfields Limited (respondent No. 3 ). as claimed by him"? ( 5 ) WE will take up the above questions and discuss the same in the above seriatim. FIRST QUESTION ( 6 ) THE Central Coalfields Limited (hereinafter REFERRED TO to as the Coalfields Limited ) (respopndent No. 3) admittedly is a Company, incorporated under the provisions of the Companies Act, 1956 and is a subsidiary of coal India Limited. another Company, incorporated under the provisions of the above said Act. We have to decide as to whether Coalfields Limited (respondent No. 3) is a state within the meaning of Article 12 of the Constitution. Article 12 of the Constitution reads as under:- "in this Part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India. " 6. 2 Thus. the expression "the State when used in parts III and IV of the Constitution is not confined to only the federating States or the Union of India or even to both. By the express terms of Article 12, the expression, the State includes:- 1) the Government of India; 2 ). " 6. 2 Thus. the expression "the State when used in parts III and IV of the Constitution is not confined to only the federating States or the Union of India or even to both. By the express terms of Article 12, the expression, the State includes:- 1) the Government of India; 2 ). the Parliament of India; 3) the Government of each of the States which constitute the Union of India; 4) the Legislature of each of the States which constitute the Union of India; 5) all the local authorities within the territory of India; 6) all the local authorities under the control of the Government of India; 7) all the other authorities within the territory of India; and 8) all the order authorities under the control ofthe Government of India. 6. 3 On a bare perusal of the provisions of Article 12 it is apparent that there are three aspects of Article 12 which require to be particularly noticed and the same are:- i) the definition given in Article 12 is not an explanatory and restrictive definition but an extensive definition, ii) it is the definition ofthe expression "the State" and not ofthe term "state" or "states", and iii) it is inserted in the Constitution for the purposes of Parts III and IV thereof. 6. 4 As pointed out in Craies on Statute Law. (Seventh Edition ). page 213. where an interpretation clause defines a word to mean a particular thing, the definition is explanatory and prima. facie. restrictive; and whenever an interpretation clause defines a term to include something, the definition is extensive. While an explanatory and restrictive definition confines the meaning of the word defined to what is stated in the interpretation clause, so that wherever the word defined is used in the particular statute in which that interpretation clause occurs, it will bear only that meaning unless where, as is usually provided, the subject or context otherwise requires, an extensive definition expands or extends the meaning of the word defined to include within it what would otherwise not have been comprehended in it when the word defined is used in its ordinary sense. Article 12 uses the word "includes". It thus extends the meaning of the expression "the State" so as to include within it also what otherwise may not have been comprehended by that expression when used in its ordinary legal sense. 6. Article 12 uses the word "includes". It thus extends the meaning of the expression "the State" so as to include within it also what otherwise may not have been comprehended by that expression when used in its ordinary legal sense. 6. 5 What then does the expression the State" in the context of Parts III and IV of the Constitution mean? 6. 6 Part III of the Constitution gives a Constitutional mandate for certain Human Rights - called Fundamental Rights in the Constitution -adapted to the needs and requirement of a Country desirous of forging a strong and powerful nation capable of taking an equal place among the nations of the world. It also provides a Constitutional mode of enforcing them. 6. 7 Part IV of the Constitution prescribes the directive Principles of State Policy . These Directive Principles have not received the same Constitutional mandate for their enforcement as the Fundamental Rights have done. In the context of the welfare State , which is the goal of our Constitution, Articles 37 and 38 (1) are of utmost significance. 6. 8 The difference between Part III and Part IV is that while Part III prohibits the State from doing certain thing? (namely, from infringing any of the Fundamental Rights), Part IV enjoins upon the State to do certain things This duty, however, is not enforceable in law but nonetheless the Court cannot ignore what has been enjoined upon the State by Part IV, and though the Court may not be able actively to enforce the Directive Principles of State Policy by compelling the State to apply them in the governance of the Country or in the making of laws the Court can, if the State commits a breach of its duty by acting contrary to these Directive Principles, prevent it from doing so. 6. 9 The state is an abstract entity and it can, therefore, only act through its agencies or instrumentalities, whether such agency or instrumentality be human or juristic. The trading and business activities of the State constitute "public enterprise". The structural forms in which the Government operates in the field of public enterprise are many and varied. These may consist of Government departments, statutory bodies, statutory corporations, Government companies, etc. The trading and business activities of the State constitute "public enterprise". The structural forms in which the Government operates in the field of public enterprise are many and varied. These may consist of Government departments, statutory bodies, statutory corporations, Government companies, etc. In this context, we can do no better than cite the following passage from "government Enterprise - A Comparative Study" by W. Friedmann and J. F. Gamer, at page 507:- "the variety of forms in which the various States have, at different times, proceeded to establish public enterprises is almost ifinite, but three main types emerge to which almost every public enterprise approximates (1 )departmental administra- tion; (2) the joint stock company controlled completely or partly by public authority; and finally (3) the public corporation proper, as a distinct type of corporation different from the private law company. Each of these three types will be briefly analysed in a comparative perspective. As the tasks of Government multiplied, as a result of defence needs, postwar crises, economic depressions and new social demands, the framework of civil service administration became increasingly insufficient for the handling of the new tasks which were often of a specialised and highly technical character. At the same time, bureaucracy came under a cloud. In Great Britain the late Lord Hewart had written of the new despotism. and Dr. C. K Allen of bureaucracy triumphant. " In France the Confederation General du Travail (CGT) had stated in its Programme in 1920 that we do not wish to increase the functions of the State itself nor strengthen a system which would subject the basic industry to a civil service regime, with all its lack of responsibility and its basic defects, a process which would subject the forces of production to a fiscal monopoly. . . This distrust of government by civil service, justified or not was a powerful factor in the development of a policy of public administration through separate corporation which would operate largely according to business principles and be separately accountable. In the common law countries, where the Government still enjoyus considerable immunities and privileges in the fields of legal responsibility, taxation, or the binding force of Statutes, other consid- erations played their part. In the common law countries, where the Government still enjoyus considerable immunities and privileges in the fields of legal responsibility, taxation, or the binding force of Statutes, other consid- erations played their part. It seemed necessary to create bodies which, if they were to compete on fair terms in the-economic field, had to be separated and distinct from the government as regards immunities and privileges. " 6. 10 In Rajasthan State Electricity Board, Jaipur V. Mohan Lal, (1967) 3 SCR 377 : ( AIR 1967 SC 1857 ) the Constitution Bench of the Supreme Court by a majority held that the Electricity Board of Rajasthan. constituted under the Electricity (Supply) Act, 1948 (Act No. 54 of 1948) was "the State" as defined in Article 12 because it was "other authority" within the meaning of that Article. The Supreme Court held that the expression "other authority" was wide enough to include within it even authority. created by a statute, on quasi-governmental functions and functioning within the territory of India or under the control of the Government of India and the fact that some of the powers conferred may be for the purpopse of carrying on commercial activities is not at all material because under Articles 19 ( 1 ) (g) and 298 even the State is empowered to carry on any trade or business. The Supreme Court further held that in interpreting the expression "other authority" the principle of ejusdem generis should not be applied, because, for the application of that rule, there must be distinct genus or category running through the bodies previously named; and the bodies specially named in Article 12 being the Executive Government of the Union and the States, the Legislature of the Union and the States and local authorities, there is no common genus running through these named bodies, nor could these bodies be placed in one single category on am rational basis. 6. 11 In case Sukhdev Singh versus Bhagat Ram Sardar Singh Raghuvanshi reported as AIR 1975 SC 1331 , one of the questions which came up for consideration before the Supreme Court was whether the statutory corporations were comprehended within the expression, the State as defined in Article 12 of the Constitution. The majority of the Constitution Bench of the Supreme Court answered the above said question in affirmative in the above said case. 6. The majority of the Constitution Bench of the Supreme Court answered the above said question in affirmative in the above said case. 6. 12 Various aspects of the question which we have to decide were exhaustively considered by the Supreme Court in case Ramana Dayaram Shetty Vs. International Airport Authority of India and Ors, ( AIR 1979 SC 1628 ). In that case the Supreme Court observed:- - Today the Government, as a welfare State, is the regulator and dispenser of special sen ices and provider of a large number of benefits. including jobs, contracts, licences, quotas, mineral rights etc. " (Emphasis supplied) 6. 13 The question in that case was whether the International Airport Authority. constituted under the International Airports Authority Act. 1971. came within the meaning of the expression "the State" in Article 12 Under the said Act. the Authority was a body corporate, having perpetual succession and a common seal and was to consist of a Chairman and certain other members appointed by the Central Government The Central Government had the power to terminate the appointment of. or remove any member from the Board. Although the Authority had no share capital of its own. capital needed by it for carrying its functions was to be provided only by the Central Government. While considering the question whether such a body corporate was included within the expression "the State", the Supreme Court in the above said decision at PP. 1638-39 observed - "a corporation may be created in one of two ways. It may be either established by statute or incorporated under a law such as the Companies Act. 1956 or the Societies Registration Act. 1860. Where a Corporation is w holly controlled by Government not only in its policy making but also in carrying out the functions entrusted to it by the law establishing it or by the Charter of its incorporation, there can be no doubt that it would be an instrumentality or agency of Government. But ordinarily w here a corporation is established by statute, it is autonomous in its working. subject only to a provision, oftentimes made. that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matters. But ordinarily w here a corporation is established by statute, it is autonomous in its working. subject only to a provision, oftentimes made. that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matters. So also a corporation incorporated under law is managed by a board of directors or committee of management in accordance with the provisions of the statute under which it is incorporated. When does such a corporation become an instrumentality or agency of Government?": (Emphasis supplied) 6. 14 After considering various factors and the case law on the subject, the Supreme Court in the above said case thus summed up the position: "it will thus be seen that there are several factors which may have to be considered in determining whether a corporation is an agency or instrumentality of Government. We have REFERRED TO to some of these factors and they may be summarised as under: Whether there is any financial assistance given by the State. and if so what is the magnitude of such assistance whether there is any other form of assistance, given by the State, and if so. whether it is of the usual kind or it is extraordinary, whether there is any control of the management and policies of the corporation by the State and what is the nature and extent of such control, whether the corporation enjoys State conferred or State protected monopoly status and whether the functions carried out by the corporation are public functions closely related to governmental functions. This particularisation of relevant factors is however not exhaustive and by its very nature it cannot be. because with increasing assumption of new tasks, growing complexities of management and administration and the necessity of continuing adjustment in relations between the corporation and Government calling for flexibility, adaptability and innovative skills, it is not possible to make an exhaustive enumeration of the tests which would invariably and in all cases provide an unfailing answer to the question whether a corporation is governmental instrumentality or agency. Moreover even amongst these factors which we have described, no one single factor will yield a satisfactory answer to the question and the Court will have to consider the cumulative effect of these various factors and arrive at its decision on the basis of a particularised inquiry into the facts and circumstances of each case. Moreover even amongst these factors which we have described, no one single factor will yield a satisfactory answer to the question and the Court will have to consider the cumulative effect of these various factors and arrive at its decision on the basis of a particularised inquiry into the facts and circumstances of each case. " 6. 15 In Managing Directror, Uttar Pradesh Warehousing Corporation v. Vijay Narayan Vajpayee, (1980) 2 SCR 773 : ( AIR 1980 SC 840 ) an employee of the Corporation successfully challenged his dismissal from service. The appellant Corporation was established under the Agricultural Produce (Development and Warehousing) Corporation Act, 1956, and was deemed to be a Warehousing Corporation for a state under the Warehousing Corporation Act, 1962. In his concurring judgment. Chinnappa Reddy, J. . (as his Lordship then was) said (at page 784 of SCR): (at pp. 845-46 of AIR): "i find it very hard indeed to discover any distinction, on principle between a person directly under the employment of the Government and a person under the employment of an agency or instrumentality of the Government or a Corporation, set up under a statute or incorporated but wholly owned by the Government. It is self evident and trite to say that the function of the State has long since ceased to be confined to the preservation of the public peace, the exaction of taxes and the defence of its frontiers. It is now the function of the State to secure social, economic and political justice, to preserve liberty of thought, expression, belief, faith and worship , and to ensure equality of status and of opportunity . " (Emphasis supplied) 6. 16 The right, title and interest of the Burmah Shell Oil Storage and Distributing Company of India Limited in relation to its undertakings in India were transferred to and vested in the Central Government under S. 3 of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976. Thereafter, under S. 7 of the said Act. the right, title, interest and liabilities of the said Company which had become vested in the Central Goveminent, instead of continuing so to vest in it, were directed to be vested in a Government company, as defined by S. 617 of the Companies Act. 1956, namely, Bharat Petroleum. Thereafter, under S. 7 of the said Act. the right, title, interest and liabilities of the said Company which had become vested in the Central Goveminent, instead of continuing so to vest in it, were directed to be vested in a Government company, as defined by S. 617 of the Companies Act. 1956, namely, Bharat Petroleum. In Som Prahash Rekhi v. Union of India, (1981 )2 SCR 111: (AIR 1981 SC 2 12) the Supreme Court held that Bharat Petroleum fell within the meaning of the expression "the State" used in Article 12. The following passage (at pages 124-5) of SCR): (at p. 218 of AIR) from the judgment in that case is instructive and requires to be reproduced:- "for purposes of the Companies Act, 1956, a government company has a distinct personality which cannot be confused with the State. Likewise, a statutory corporation constituted to carry on a commercial or other activity is for many purposes a distinct juristic entity not drowned in the sea of State, although, in substance, its existence may be but a projection of the State. What we wish to emphasise is that merely because a company or other legal person has functional and jural individuality for certain purposes and in certain areas of law. it does not necessarily follow that for the affective enforcement of fundamental rights under our constitutional scheme, we should not scan the real character of that entity; and if it is found to be a mere agent or surrogate of the State, in fact owned by the State, in truth controlled by the State and in effect an incarnation of the State, constitutional lawyers must not blink at these facts and frustrate the enforcement of fundamental rights despite the inclusive definition of Article 12 that any authority controlled by the Government of India is itself State. Law has many dimensions and fundamental facts must govern the applicability of fundamental rights in a given situation. " (Emphasis supplied) 6. 17 In Workmen of Hindustan Steel Ltd. v. Hindustan Steel Ltd. , (1984) Supp SCC 554; ( AIR 1985 SC 251 ) the Supreme Court held that the Hindustan Steel Ltd. was a public sector undertaking and, therefore, was "other authority" within the meaning of that expression in Article 12 6. 18 In P. K. Ramachandra Iyer v. Union of India, (1984) 2 SCC 141 : ( AIR 1984 SC 541 ). 18 In P. K. Ramachandra Iyer v. Union of India, (1984) 2 SCC 141 : ( AIR 1984 SC 541 ). once again following Ajay Hasia s case ( AIR 1981 SC 487 ), the Supreme Court held that the Indian Council of Agricultural Research which w as a society registered under the Societies Registration Act was an instrumentality of the State falling under the expression "other authority" within the meaning of Article 12. The said Council was wholly financed by the Government. Its budget. was voted upon as part of the expenses incurred in the Ministry of Agriculture. The control of the Government of India permeated through all its activities. Since its inception, it w as set up to earn out the recommendations of the royal Commission on Agriculture . According to the Supreme Court, the above facts were sufficient to make the said Council an instrumentality of the State. 6. 19 In the above mentioned case of Ajay Hasia, the Supreme Court while holding that the Regional Engineering College, which was established, administered and managed by a Society, registered under the Jammu and Kashmir Registration of Societies Act, 1988 was a state within the meaning of Article 12 of the Constitution made the following observations which are of utmost significance:- "the concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a company or society and in a given case it would have to-be decided, on a consideration of the relevant factors, whether the company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression "authority" in Article 12. " "it is in the light of this discussion that we must now proceed to examine whether the Society in the present case is an "authority" falling w within the definition of "state" in Article 12. Is it an instrumentality or agency of the Government? The answer must obviously be in the affirmative if we have regard to the Memorandum of Association and the Rules of the Society. The composition of the Society is dominated by the representatives appointed by the Central Government and the Governments of Jammu and Kashmir, Punjab, Rajas than and Uttar Pradesh with the approval of the Central Government. The answer must obviously be in the affirmative if we have regard to the Memorandum of Association and the Rules of the Society. The composition of the Society is dominated by the representatives appointed by the Central Government and the Governments of Jammu and Kashmir, Punjab, Rajas than and Uttar Pradesh with the approval of the Central Government. The monies required for running the college are provided entirely by the Central Government and the Government of Jammu and Kashmir and even if any other monies are to be received by the Society, it can be done only with the approval of the State and the Central Governments. The Rules to be made by the Society are also required to have the prior approval of the State and the Central Governments and the accounts of the Society have also to be submitted to both the Governments for their scrutiny and satisfaction. The Society is also to comply with all such directions as may be issued by the State Government w ith the approval of the Central Government in respect of any matters dealt with in the report of the Reviewing Committee. The control of the State and the Central Governments is indeed so deep and pervasive that no immovable property of the Society can be disposed of in any manner without the approval of both the Governments, the State 187 and the Central Governments have even the power to appoint any other person or persons to be members of the Society and any member of the Society other than a member representing the State or Central Governments can be removed from the mem- bership of the Society by the State Government with the approval of the Central Goveminent. The Board of Governors. which is in charge of general superintendence. direction and control of the affairs of Society and of its income and property is also largely controlled by nominees of the State and the the Central Goveemments. It will thus be seen that the State Government and by reason of the provision for approval. the Central Government also. have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Government and to use the words of Ray. It will thus be seen that the State Government and by reason of the provision for approval. the Central Government also. have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Government and to use the words of Ray. C. J. in Sukhdev Singh s case ( AIR 1975 SC 1331 ) (supra) the voice is that of the State and the Central Governments and the hands are also of the State and the Central Governments. We must, therefore, hold that the Society is an instrumentality or the agency of the State and the Central Governments and it is an "authority within the meaning of Article12 (Emphasis supplied) 6. 20 If the above criterion is applied to the present case. it is noticed that the Coalfield Limited (respondent No -. 3 ). though a Company incorporated under the provisions of the Companies Act, 1956, yet the same is a subsidiary of Coal India Limited. From a perusal of the Memorandum and Article of Association of Coal India Limited, made available to us during the hearing of the case for our perusal it is apparent that the Company is to act as an instrumentality of the policy of the Central Government subject to such directives as may be issued by the President of India from time to time with a view to exercising control over the strategic areas of economy. Articles 14. 15. 18. 19. 20. 21 and 32 are indicative of the 'state control' (Central Government and the President of india) over the above said Company. The Chairman, Vice-chairman. Managing Director. Members of the Board of Directors of the Company are to be appointed by the President ofindia. In terms of the provisions contained in Article 37, the President of india has the powers to issue directives as may be considered necessary by him in regard to the conduct of business and affairs of the Company. Even the petitioner was appointed as Directror (Administration) and Chairman cum Managing Director of Coalfield Limited (respondent No -. 3) under the orders of the Government of India. The impugned communications orders, being assailed by the petitioner in the present petition, too have been issued by the Government of India, Ministry of Energy. Department of Coal. 6. Even the petitioner was appointed as Directror (Administration) and Chairman cum Managing Director of Coalfield Limited (respondent No -. 3) under the orders of the Government of India. The impugned communications orders, being assailed by the petitioner in the present petition, too have been issued by the Government of India, Ministry of Energy. Department of Coal. 6. 21 Above all the admission on the part of respondent-No. 3 in para 20 of its counter that the respondent No -. 3 is a 'government Company" clinches the issue finally. Thus. the quantum of Government control in the functioning of Coalfield Limited (respondent No -. 3 ). in our opinion is effective in all areas ie. including administrative and policy matters. In our opinion. it is nothing but the Government operating behind a corporate veil. carrying out a Government activity and functions of vital public importance under its control. In every respect, it is thus a veil. behind which the Central Government is operating through the instrumentality of a Company incorporated under the provisions of the Companies Act. 1956. In view of the above discussion, in our opinion, the Coalfield Limited (respondent No. 3) is decidedly a 'state' within the meaning of Article 12 of the Constitution. ( 7 ) DURING the course of arguments, it was contended by the petitioner that since the petitioner in his capacity as Chairman-cum-Managing Director of the Coalfields Limited (respondent No. 3) was holding a "civil Post within the meaning of Article 310 and. 311 of the Constitution of India, he could not have been removed or his services could not have been terminated in the manner the same was done by the respondents vide impugned communications dated the 8th February. 1983 and 19th February. 1983 without any charge sheet or without any inquiry as contemplated under Clause (2) of Article 311 of the Constitution. 7. 2 The question of questions requiring consideration for resolving the above controversy is whether the petitioner was holding a "civil Post" at the relevant time i. e on 8. 2. 83 while working as Chairman-cum-Managing Director of Coalfields Limited (respondent No. 3 ). In case Lachmi V, Military Secy. to the Government of Bihar ( AIR 1956 Pat. 7. 2 The question of questions requiring consideration for resolving the above controversy is whether the petitioner was holding a "civil Post" at the relevant time i. e on 8. 2. 83 while working as Chairman-cum-Managing Director of Coalfields Limited (respondent No. 3 ). In case Lachmi V, Military Secy. to the Government of Bihar ( AIR 1956 Pat. 398 ) the expression 'civil Post' under the Union or the State was held to mean that the "civil Post' must be in the control of the Union or the State and that it must be open to the Union or the State to abolish the post or to regulate the conditions of sen ice. Patna High Court in a later case - Subodh Ranjan Ghosh V. Sindhri Fertilisers and Chemical Limited ( AIR 1957 Pat 10 ) "held that the employees of Sindhri Fertilisers were not entitled to the protection of Article 311 of the Constitution. Same view has been taken by the High Court of Allahbad in case Ram Babu Rathaur V. Divsional Manager, I. ife Insurance Corporation of India ( AIR 1961 All. 502 ) and b\ the High Court of Calcutta in case Damodar Valley Corporation V. Provat Roy (60 Ca\ WN 1023 ). In case Tamlin V. Hannaford ( 1950-1 KB-18) it was held in relation to a business that although the Ministry was really incharge the Corporation was different from the "crown' and the services of the Corporation were not Civil Sen ices The Supreme Court in case Dr. S. L. Aggarwal V. The General Manager, Hindustan Steel Limited reported as AIR 1970 SC 1150 held:- "we must. therefore, hold that the corporation which is Hindustan Steel Limited in this case is not a department of the Government nor are the. sen ants of it holding posts under the State. It has its independent existence and by law relatring to Corporations it is distinct even from its members. In these circumstances, the appellant, who was an employee of Hindustan Steel Limited, does not answer the description of a holder of a civil post under the Union' as stated in the article. The appellant was not entitled to the protection of Article 311. 7. 3 The Supreme Court in case K. C. Joshi V. Union of India and Ors. In these circumstances, the appellant, who was an employee of Hindustan Steel Limited, does not answer the description of a holder of a civil post under the Union' as stated in the article. The appellant was not entitled to the protection of Article 311. 7. 3 The Supreme Court in case K. C. Joshi V. Union of India and Ors. reported as ( AIR 1985 SC 1046 ) observed:- "even if the employees of the Corporation, which is an instrumentality of the State, cannot be said to be the members of a civil service of the Union or an All-India service or hold any civil post under the Union, for the purpose of Articles 310 and 311 and therefore, not entitled to the protection of Article 311, they would none-the-less be entitled to protection of the fundamental rights enshrined in Articles 14 and 16 of the Constitution. " 7. 4 In view of above cited decisions of the various High Courts and the Supreme Court, we are of the view that the petitioner while working as Chairman-cum-Managing Director of Coalfields Limited (respondent No. 3) was not holding a 'civil Post" within the meaning of Article 310 and 311 of the Constitution and the protection available to the holders of a "civil Post" under the provisions of Article 311 of the Constitution is, therefore, not available to the petitioner. ( 8 ) THE Supreme Court, relying on its earlier decisions in case Purshottam Lal Dhingra V. Union of India (AIR 195s SC 36) and Champak Chimanlal Shah v. Union of India ( AIR 1964 SC 1854 ). in case Shamaher Singh v. State of Punjab reported as AIR 1974 SC 2192 held:- The form of the order is not decisive as to whether the order is by way of punishment. Even an innocuously worded order terminating the service may in the facts and circumstances of the case establish that an enquiry into allegations of serious and grave character of misconduct involving stigma has been made in infraction of the provision of Art 311. In such a case the simplicity of the form of the order will not give any sanctity. 8. 2 Thereafter in another case of Ravindra Kumur Mishra v. U. P. State Handloom Corporation Limited and anr. reported as AIR 1987 SC 2408 . In such a case the simplicity of the form of the order will not give any sanctity. 8. 2 Thereafter in another case of Ravindra Kumur Mishra v. U. P. State Handloom Corporation Limited and anr. reported as AIR 1987 SC 2408 . the Apex Court observed:- "in several authoritative pronouncements of this Court, the concept of 'motive' and "foundation' has been brought in for finding out the effect of the order of termination. " 8. 3 As per settled law for finding out the effect of the 'order of termination', in whatever form the same may be. the concept of 'motive' and 'foundation' has to be kept in mind. Though no strait jacket test can be laid down to distinguish, the two viz the 'motive' and the 'foundation', yet the fact remains that the two are certainly two points of one line - ordinarily apart but when they come together "motive' does get transformed and merges into "foundation'. Whether in reality 'motive' has become the 'foundation' has to be decided by the Court with reference to the facts of a given case. 8. 4 It was submitted before us by the learned counsel for the respondents that the petitioner, in regard to his condition of service was governed by the "conduct. Discipline and Appeal Rules (Coal India Limited ). 1978" (hereinafter REFERRED TO to as 'the Rules") and rule 2 7 of the Rules inter alia provided for the termination of the sen ices of an employee. employed under an agreement or contract in accordance with the terms of such agreement or contract and that the services of the petitioner had been terminated by the respondents in accordance with the terms and conditions of his 'contract of service' and thus there was nothing illegal or arbitrary in the same. 8. 5 The petitioner on the other hand contended that the clause relating to the termination of the sen ice of an employee, as contained in rule 27 (1) (viii) (c) of the Rules and relied upon by the respondents was unconstitutional, bad in law and such a condition deserved to be struck down by the Courts. 8. 6 Under Section 19 of the Contract Act. when consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. 8. 6 Under Section 19 of the Contract Act. when consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. It is not the case of the petitioner that there was any coercion brought to bear upon him or that any fraud or misrepresentation had been practised upon him. Under Section 19a. when consent to an agreement is caused by "undue -influence", the agreement is a contract voidable at the option of the party whose consent was so caused and the Court may set aside any such contract either absolutely or if the party who was entitled to avoid it had received any benefit thereunder, upon such terms and conditions as the Court may deem just Sub-section (1) of Section 16 defines "undue influence" as follows: "16. "undue influence'defined.- (i) A contract is said to be induced by undue influence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. " 8. 7 The material provisions of Sub-section (2) of Section 16 are as follows' " (2) In particular and without prejudice to the generality of the foregoing principle. a person is deemed to be in a position to dominate the will of another - (a) where he holds a real or apparent authority over the other. . . . . 8. 8 We need not trouble ourselves with the other sections of the Contract Act except Section 2? and 24. Section 23 states that the consideration or object of an agreement is lawful unless inter alia the Court regards it as opposed to 'public policy'. This section further provides that every agreement of which the object or consideration is unlawful is void. Under Section 24, if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object is unlawful, the agreement is void. The agreement is. This section further provides that every agreement of which the object or consideration is unlawful is void. Under Section 24, if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object is unlawful, the agreement is void. The agreement is. however, not always void in its entirety for it is well settled that if several distinct promises are made for one and the same lawful consideration, and one or more of them be such as the law will not enforce, that w ill not of itself prevent the rest from being enforceable. The general rule was stated by Willes J. . in Pickering v. Ilfracombe Ry. Co. ( 1868) 3 CP 235 (at page 250) as follows: "the general rule is that. where you cannot sever the illegal from the legal part of a covenant. the contract is altogether void; but where you can sever them. whether the illegality be created by statute or by the common law, you may reject the bad part and retain the good". 8. 9 Under which head would an unconscionable bargain fall If it falls under the head of 'undue influence it would be voidable but if it falls under the head of being opposed to "public policy'. it would be void. The word "unconscionable is defined in the Shorter Oxford English Dictionary. Third Edition. Volume II. page 2288. when used with reference to actions etc. as "showing no regard for conscience: irreconcilable with what is right or reasonable. An unconscionable bargain would. therefore, be one which is irreconcilable with what is right or reasonable. 8. 10 Although certain types of contracts were illegal or void. as the case may be at Common Law. for instance, those contrary to 'public policy or to commit a legal wrong such as a crime or a tort. the general rule was of freedom of contract. This rule was given full play in the nineteenth century on the ground that the parties were the best judges of their own interests, and if they freely and voluntarily entered into a contract, the only function of the Court was to enforce the same. the general rule was of freedom of contract. This rule was given full play in the nineteenth century on the ground that the parties were the best judges of their own interests, and if they freely and voluntarily entered into a contract, the only function of the Court was to enforce the same. It was considered immaterial that one party w as economically in a stronger bargaining position than the other; and if such a party introduced qualifications and exceptions to his liability in clauses which are today known as "exemption clauses" and the other party accepted them. then full effect was to be given to what the parties agreed. Equity, however, interfered in many cases of harsh or unconscionable bargains, such as. in the law relating to penalties, forfeitures and mortgages. It also interfered to set aside harsh or unconscionable contracts for salvage services rendered to a vessel in distress, or unconscionable contracts with expectant heirs in which a person, usually a money-lender, gave ready cash to the heir in return for the property which he expects to inherit and thus to get such property at a gross undervalue. It also interfered with harsh or unconscionable contracts entered into with poor and ignorant persons who had not received independent advice (Chitty on Contracts. Twenty-fifth Edition. Volume 1. paragraphs 4 and 516 ). 8. 11 Legislation has also interefered in many cases to prevent one party to a contract from taking undue or unfair advantage of the other. Instances of this type of legislation are usury laws. debt relief laws and laws regulating the hours of work and conditions of sen ice of workmen and their unfair discharge from service, and control orders directing a party to sell a particular essential commodity to another. 8. 12 In this connection, it is useful to note what Chitty has to say about the old ideas of freedom of contract in modem times. The relevant passages are to be found in Chitty on Contracts. Twenty- fifth Edition. Volume I. in paragraph 4. and are as follows:- "these ideas have to a large extent lost their appeal today. 'freedom of contract,' it has been said, "is a reasonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed, and no injury is done to the economic interests of the community at large. and are as follows:- "these ideas have to a large extent lost their appeal today. 'freedom of contract,' it has been said, "is a reasonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed, and no injury is done to the economic interests of the community at large. ' Freedom of contract is of little value when one party has no alternative between accepting a set of terms proposed by the other or doing w ithout the goods or sen ices offered. Many contracts entered into by public utility undertakings and others take the form of a set of terms fixed in advance by one party and not open to discussion by the other. These are called 'contracts dadhesion' by French lawyers- Traders frequently contract, not on individually negotiated terms, but on those contained in a standard form of contract settled by a trade association. And the terms of an employee's contract of employment may be determined by agreement between his trade union and his employer, or by a statutory scheme of employment. Such transactions are neverthe- less contracts notwithstanding that freedom of contract is to a great extent lacking. Where freedom of contract is absent, the disadvantages to consumers or members of the public have to some extent been offset by administrative procedures for consultation, and by legislation. Many statutes introduce terms into contracts which the parties arc forbidden to exclude, or declare that certain provisions in a' contract shall be void. And the Courts hav e developed a number of devices for refusing to implement exemption clauses imposed by the economically stronger party on the weaker, although they hav e not. recognised in themselves any general power (except by statute) to declare broadly that an exemption clause w ill not be enforced unless it is reasonable. Again, more recently, certain of the judges appear to have recognised the possibility of relief from contractual obligations on the gound of 'inequality of bargaining power'. " 8. 13 What the French call "contracts dadhesion", the American call "adhesion contracts' or "contracts of adhesion'. An "adhesion contract is defined in Black's Law Dictionary. Fifth Edition, at page 38 as follovvs:- "adhesion contract'. " 8. 13 What the French call "contracts dadhesion", the American call "adhesion contracts' or "contracts of adhesion'. An "adhesion contract is defined in Black's Law Dictionary. Fifth Edition, at page 38 as follovvs:- "adhesion contract'. Standardized contract form offered to consumers of goods and services on essentially "take it or leave it' basis without affording consumer realistic opportunity to bargain and under such conditions that consumer cannot obtain desired product or sen ices except by acquiescing in form contract. Distinctive feature of adhesion contract is that weaker party has no realistic choice as to its terms. Not every such contract is unconscionable. " 8. 14 The. position under the American Law is stated in "reinstatement of the Law - Second" as adopted and promulgated by the American Law Institute. Volume II which deals with the Law of Contracts, in section 208 at page 107. as follows: "if a contract or term thereof is unconscionable at the time the contract is made a Court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term. or may so limit the application of am unconscionable term as to avoid any unconscionable result. " 8. 15 In the Comments given under that section it is stated at page 107: "like the obligation of good faith and fair dealing ($205 ). the policy against unconscionable contracts or terms applies to a wide variety of types of conduct. The determination that a contract or term is or is not unconscionable is made in the light of its setting, purpose and effect. Relevant factors include weaknesses in the contracting process like those involved in more specific rules as to contractual capacity, fraud and other invalidating causes, the policy also overlaps with rules which render particular bargains or terms unenforceable on ground of public policy. Policing against unconscionable contracts or terms has sometimes been accomplished by adverse construction of language, by manipulation of the rules of offer and acceptance or by determinations that the clause is contrary to public policy or to the dominant purpose of the contract". Uniform Commercial Code $ 2-302 Comment ]. . . . . . A bargain is not unconscionable merely because the parties to it arc unequal in bargaining position, nor even because the inequality results in an allocation of risks to the weaker party. Uniform Commercial Code $ 2-302 Comment ]. . . . . . A bargain is not unconscionable merely because the parties to it arc unequal in bargaining position, nor even because the inequality results in an allocation of risks to the weaker party. But gross inequality of bargaining power, together with terms unreasonably favourable to the stronger party. may confirm indications that the transaction involved elements of deception or compulsion, or may show that the weaker party had no meaningful choice, no real alternative, or did not in fact assent or appear to assent to the unfair terms " (Emphasis supplied) 8. 15-A There is a statute in the United States called the 'universal Commercial Code' which is applicable to contracts relating to sales of goods. Though this statute is inapplicable to contracts not involving sales of goods, it has proved very influential in. what are called in the United States, "non- sales" cases. It has many times been used either by analogy or because it was felt to embody a general accepted social attitude of fairness going beyond its statutory application to sales of goods. In the Reporter's Note to the said section 208. it is stated at page 112: "it is to be emphasized that a contract of adhesion is not unconscionable per se. and that all unconscionable contracts are not contracts of adhesion Nonetheless, the more standardized the agreement and the less a party may bargain meaningfully the more susceptible the contract or a term will be to a claim of unconscioability. " (Emphasis supplied) 8. 16 The position has been thus summed up by John R. Peden in "the Law of Unjust Contracts published bv Butterworths in 1982. at pages 28-29: ". . . . . Unconscionability represents the end of a cycle commencing with the Aristotelian concept of justice and the Roman law laesio ennuis. which in turn formed the basis for the medieval church's concept of a just price and condemnation of usury. These philosophics permeated the exercise, during the seventeenth and eighteenth centuries of the Chancery Court's discretionary powers under which it upset all kinds of unfair transactions. Subsequently the movement towards economic individualism in the nineteenth century hardened the exercise of these powers by emphasizing the freedom of the parties to make their own contract. These philosophics permeated the exercise, during the seventeenth and eighteenth centuries of the Chancery Court's discretionary powers under which it upset all kinds of unfair transactions. Subsequently the movement towards economic individualism in the nineteenth century hardened the exercise of these powers by emphasizing the freedom of the parties to make their own contract. While the principle of pacta sunt servanda held dominance, the consensual theory still recognised exceptions where one part was overborne by a fiduciary or entered a contract under duress or as the result of fraud. However, these exceptions were limited and had to be strictly proved. It is suggested that the judicial and legislative trend during the last 30 years in both civil and common law jurisdictions has almost brought the wheel full circle. Both courts and Parliaments have provided greater protection for weaker parties from harsh contracts. In several jurisdictions this included a general power to grant relief from unconscionable contracts, thereby providing a launching point from which the courts have the opportunity to develop a modem doctrine of unconscionability. American decisions on article 2. 302 of the UCC have already gone some distance into this new arena. . . . . . " 8. 17 The expression "lacsio enormis" used in the above passage refers to "laesio ultra dimidium vel enormis" which in Roman law meant the injury sustained by one of the parties to an onerous contract when he had been overreached by the other to the extent of more than one half of the value of the subject-matter, as for example, when a vendor had not received half the value of property sold, or the purchaser had paid more than double value. The maxim "pacta sunt servanda" REFERRED TO to in the above passage means "contracts are to be kept". 8. 18 It would appear from certain recent English cases that the Courts in that Country have also begun to recognize the possibility of an unconscionable bargain which could be brought about by economic duress even between parties who may not in economic terms be situate differently (See, for instance, Occidental Worldwide Investment Corpn. v. Skibs A/s Avanti (1976) I Lloyd's Rep. 293, North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. v. Skibs A/s Avanti (1976) I Lloyd's Rep. 293, North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. (1979) QB 705, Pao On v. Lau Yin Long (1980) AC 614 and Universe Tankships of Monrovia v. International Transport Workers Federation (1981) ICR 129, reversed in (1982) 2 WLR 803, and the commentary on these cases in Chitty on Contracts. Twenty-fifth Edition. Volume I, paragraph 486 ). 8. 19 Another jurisprudential concept of comparatively modem origin which has affected the law of contracts is the theory of "distributive justice". According to this doctrine, distributive fairness and justice in the possession of wealth and property can be achieved not only by taxation but also by regulatory control of private and contractual transactions even though this might involve some sacrifice of individual liberty. In Lingappa Pochanna Appelwar v. State of Maharashtra, (1985) 1 SCC 479 : ( AIR 1985 SC 389 ), the Supreme Court, while upholding the constitutionality of the Maharashtra Restoration of Lands to Scheduled Tribes Act. 1974, observed:- "the present legislation is a typical illustration of the concept of distributive justice, as modern jurisprudents know it. Legislators. Judges and administrators are now familiar with the concept of distributive justice. Our Constitution permits and even disrects the State to administer what may be termed "distributive justice'. The concept of distributive justice in the sphere of law-making connotes, inter alia, the removal of economic inequalities and rectifying the injustice resulting from dealings or transactions between unequals in society. Law should be used as an instrument of distributive justice to achieve a fair division of wealth among the members of society based upon the principle : From each according to his capacity, to each according to his needs. Distributive justice comprehends more than achieving lessening of inequalities by differential taxation, giving debt relief or distribution of property owned by one to many who have none by imposing ceiling on holdings, both agricultural and urban, or by direct regulation of contractual transactions by forbidding certain transactions and, perhaps, by requiring others. It also means that those who have been deprived of their properties by unconscionable bargains should be restored their property. All such laws may take the form of forced redistribution of wealth as a means of achieving a fair division of material resources among the members of society or there may be legislative control of unfair agreements. " (Emphasis supplied) 8. All such laws may take the form of forced redistribution of wealth as a means of achieving a fair division of material resources among the members of society or there may be legislative control of unfair agreements. " (Emphasis supplied) 8. 20 When our Constitution states that it is being enacted in order to give to all the citizens of India "justice, social, economic and political", when clause (1) of Article 38 of the Constitution directs the State to strive to promote the welfare of the people by securing and protecting as effectively as it may be social order in which social, economic and political justice shall inform all the institutions of the national life. when clause (2) of Article 38 directs the State, in particular, to minimize the inequalities in income, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations, and when Article 39 directs the State that it shall, in particular, direct its policy towards securing that the citizens, men and women equally, have the right to an adequate means of livelihood and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment and that there should be equal pay for equal work for both men and women, it is the doctrine of distributive justice which is speaking through these words of the Constitution. 8. 21 Yet another theory which has made its emergence in recent years in the sphere of the law of contracts is the test of 'reasonableness' or 'fairness' of a clause in a contract where there is inequality of bargaining power. Lord Denning, M. R. , appears to have been the propounder, and perhaps the originator - at least in England, of this theory. In Gillespie Brothers and Co. Ltd. v. Roy Bowles Transport Ltd. (1973) 1 QB 400, where the question was whether an indemnity clause in a contract, on its true construction, relieved the indemnified from liability arising to the indemnified from his own negligence. Lord Denning said at pages 415-6): "the time may come when this process of construing the contract can be pursued no further. The words are too clear to permit of it. Lord Denning said at pages 415-6): "the time may come when this process of construing the contract can be pursued no further. The words are too clear to permit of it. Are the courts then powerless?' Are they to permit the party to enforce his unreasonable clause, even when it is so unreasonable, or applied so unreasonably, as to be unconscionable? When it gets to this point. I would say. as I said many years ago: "there is the vigilance of the common law which, while allow ing freedom of contract. watches to see that it is not abused' : John Lee and Son (Grantham) Ltd. v. Railway Executive (1949) 2 All ER 581, 584. It will now allow a party to exempt himself from his liability at common law when it would be quite unconscionable for him to do so. " (Emphasis supplied) 8. 22 In the above case the Court of Appeal negatived the defence of the indemnifier that the indemnity clause did not cover the negligence of the indemnified. It was in (1974) 3 All ER 757 that Lord Denning first clearly enunciated his theory of "inequality of bargaining power". He began his discussion on this part of the case by stating (at page 763): "there are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms, when the one is so strong in bargaining power and the other so weak that, as a matter of common fairness, it is not right that the strong should be allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time has come when we should seek to find a principle to unite them. I put on one side contracts or transactions which are voidable for fraud or misrepresentation or mistake. All those are governed by settled principles. I go only to those where there has been inequality of bargaining power, such as to merit the intervention of the Court. (Emphasis supplied) 8. 23 He then REFERRED TO to various categories of cases and ultimately deduced therefrom a general principle in these words (at page 765): "gathering all together. I would suggest that through all these instances there runs a single thread. (Emphasis supplied) 8. 23 He then REFERRED TO to various categories of cases and ultimately deduced therefrom a general principle in these words (at page 765): "gathering all together. I would suggest that through all these instances there runs a single thread. They rest on 'inequality of bargaining power'. By virtue of it, the English law gives relief to one who without independent advice, enters into a contract on terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the benefit of the other. When I use the word 'undue'. I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage may be moved solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference to the will of the one being 'dominated' or 'overcome' by the other. One who is in extreme need may knowingly consent to a most improvident bargain, solely to relieve the straits in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice. But the absence of it may be fatal. With these explanations. I hope this principle will be found to reconcile the cases. " (Emphasis supplied) 8. 24 Though the House of Lords does not yet appear to have unanimously accepted this theory, the observations of Lord Diplock in A. Schroeder Music Publishing Co. Ltd. v. Macaulay (Formerly Instone) (1974) 1 WLR 1308 are a clear pointer towards this direction. In that case a song writer had entered into an agreement with a music publisher in the standard form whereby the publishers engaged the song writer's exclusive services during the term of the agreement, which was five years. Under the said agreement, the song writer assigned to the publisher the full copyright for the whole world in his musical compositions during the said term. By another term of the said agreement, if the total royalties during the term of the agreement exceeded $ 5,000 the agreement was to stand automatically extended by a further period of five years. Under the said agreement, the song writer assigned to the publisher the full copyright for the whole world in his musical compositions during the said term. By another term of the said agreement, if the total royalties during the term of the agreement exceeded $ 5,000 the agreement was to stand automatically extended by a further period of five years. Under the said agreement, the publisher could determine the agreement, at any time by one month's written notice but no corresponding right was given to the song writer. Further, while the publisher had the right to assign the agreement, the song writer agreed not to assign his rights without the publisher's prior writt. sn consent. The song writer brought an action claiming, inter alia. a declaration that the agreement was contrary to public policy and void Plowman. J. who heard the action granted the declaration which was sought and the Court of Appeal affirmed his judgement. An appeal filed by the publishers against the judgement of the Court of Appeal was dismissed by the House of Lords. The Law Lords held that the said agreement was void as it was in restraint of trade and thus contrary to public policy. In his speech Lord Diplock. however, outlined the theory of "reasonableness' or 'fairness of a bargain'. The following observations of his on this part of the case require to be reproduced in extenso (at pages 1315- 16): "my Lords, the contract under consideration in this appeal is one whereby the respondent accepted restrictions upon the way in which he would exploit his earning power as. a song writer for the next ten years. Because this can be classified as a contract in restraint of trade the restrictions that the respondent accepted fell within one of those limited categories of contractual promises in respect of which the courts still retain the power to relieve the promisor of his legal duty to fulfil them. a song writer for the next ten years. Because this can be classified as a contract in restraint of trade the restrictions that the respondent accepted fell within one of those limited categories of contractual promises in respect of which the courts still retain the power to relieve the promisor of his legal duty to fulfil them. In order to determine w hether this case is one in which that power ought to be exercised, what your Lordships have in fact been doing has been to assess the relative bargaining power of the publisher and the song writer at the time the contract was made and to decide whether the publisher had used his superior bargaining power to exact from the song writer promises tliat were unfairly onerous to him Your Lordships have not been concerned to inquire whether the public have in fact been deprived of the fruit of the song writer's talents by reason of the restrictions, nor to asses the likelihood that they would be so deprived in the future if the contract were permitted to run its full course. It is, in my view. salutary to acknowledge that in refusing to enforce provisions of a contract whereby one party agrees for the benefit of the other party to exploit or to refrain from exploiting his own earning power, the public policy which the Court is implementing isnot some 19th certturv economic theory about the benefit to the general public of freedom of trade, but the protection of those whose bargaining power is weak against being forced by those whose bargaining power is stronger to enter into bargains that are unconscionable. Under the influence of Bentham and of laissez faire the Courts in the 19th century abandoned the practice of applying the public policy against unconscionable bargains to contracts generally, as they had formerly done to any contract considered to be usurious: but the policy survived in its aplication to penalty clauses and to relief against forfeiture and also the special. category of contracts in restraint of trade. If one looks at the reasoning of 19th century judges in cases about contracts in restraint of trade one finds lip service paid to current economic theories, but if one looks at what they said in the light of what they did. category of contracts in restraint of trade. If one looks at the reasoning of 19th century judges in cases about contracts in restraint of trade one finds lip service paid to current economic theories, but if one looks at what they said in the light of what they did. one finds that they struck dow n a bargain if they thought it Was unconscionable as between the parties to it and uplield it if they thought that it was not. So I would hold that the question to be answered as respects a contract in restraint of trade oftlie kind with which this appeal is concerned is: "was the bargain fair?'' The test of fairness is. no doubt, whether the restrictions are both reasonably necessary for the protection of the legitimate interests of the promisee and commen- surate w ith the benefits secured to the promisor under the contract. For the purpose of this test all the provisions of the contract must be taken into consideration. '' (Emphasis supplied) 8. 25 Lord Diplock then proceeded to point out that there are two kinds of standard forms of contracts. The first is of contracts which contain standard clauses which "have been settled over the years by negotiation by representatives of the commercial interests involved and have been widely adopted because experience has shown that they facilitate the conduct of trade". He then proceeded to state. "if fairness or reasonableness were relevant to their enforceability the fact that they are widely used by parties whose bargaining power is fairly matched would raise a strong presumption that their terms are fair and reasonable". Referring to the other kind of standard form of contract Lord Diplock said (at page 1316): "the same presumption, however, does not apply to the other kind of standard form of contract. This is of comparatively modem origin. It is the result of the concentration of particular kinds of business in relatively few hands. The ticket cases in the 19th century provide what are probably the first examples. The terms of this kind of standard form of contract have not been the subject of negotiation between the parties to it. or approved by any organisation representing the interests of the weaker party. The ticket cases in the 19th century provide what are probably the first examples. The terms of this kind of standard form of contract have not been the subject of negotiation between the parties to it. or approved by any organisation representing the interests of the weaker party. They have been dictated by that party whose bargaining power, either exercised alone or in conjunction with others providing similar goods or services, enables him to say : " If you w ant these goods or sen ices at all. these are the only terms on which they are obtainable. Take it or leave it. To be in a position to adopt this attitude towards a party desirious of entering into a contract to obtain goods or services provides a classic instance of superior bargaining power. " (Emphasis supplied) 8. 26 The observations of Lord Denning. M. R. , in Levison v. Patent Steam Carpet Co. Ltd. (1978) 1 QB 69, are also useful and require to be quoted These obsenations arc as follows (at page 79): "in such circumstances as here the Law Commission in 1975 recommended that a term which exempts the stronger party from his ordinary common law liability should not be given effect except when it is reasonable: see The Law Commission and the Scottish Law Commission Report. Exemption Clauses, Second Report (1975) (August 5, 1975 ). Law Com. No. 69 (H C. 605 ). pp. 62. 174: and there is a bill now before Parliament which gives effect to the test of reasonableness. This is a gratifying piece of law reform: but I do not think we need wait for that bill to be passed into law. You never know w hat may happen to a bill Meanwhile the common law has its own principles ready to hand. In Gillespie Bros and Co. Ltd. v. Roy Bowles Transport Ltd. (1973) 1 QB 400, 416. I suggested that an exemption or limitation clause should not be given effect if it was unreasonable, or if it would be unreasonable to apply it in the circumstances of the case. I see no reason why this should not be applied today, at any rate in contracts in standard forms where there is inequality of bargaining power. " 8. 27 The Bill REFERRED TO to by Lord Denning in the above passage, when enacted, became the "unfair Contract Terms Act, 1977. I see no reason why this should not be applied today, at any rate in contracts in standard forms where there is inequality of bargaining power. " 8. 27 The Bill REFERRED TO to by Lord Denning in the above passage, when enacted, became the "unfair Contract Terms Act, 1977. This statute does not apply to all contracts but only to certain classes of them. It also does not apply to contracts entered into before the date on which it came into force. namely, February 1, 1978: but subject to this it applies to liability for any loss or damage which is suffered on or after that date. It strikes at clauses excluding or restricting liability in certain classes of contracts and torts and introduces in respect of clauses of this type the test of reasonableness and prescribes the guidelines for determining their reasonableness. 8. 28 In the above background, the following observations of the Supreme Court in case Central Inland Water Transport Corporation Limited and anr. Vs. Brojo Nath Ganguli and Anr. reported as AIR 1986 SC 1571 are of utmost significance:- "should then our courts not advance with the times? Should they still continue to cling to outmoded concepts and outworn ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of nineteenth-century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should the courts sit back and watch supinely while the strong trample under foot the rights of the weak? We have a Constitution for our country. Our judges are bound by their oath to "uphold the Constitution and the laws". The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article 14. This principle is that the courts w ill not enforce and will. The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article 14. This principle is that the courts w ill not enforce and will. when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle w ill apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, how ever unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle. however. will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are business men and the contract is a commercial transaction. In today's complex world of giant corporations with their vast infra-structural organisations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances. " 8. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances. " 8. 29 It is not as if the courts have no power under the existing law. Under section 31 (1) of the Specific Relief Act, 1963 (Act No. 47 of 1963), any person against whom an instrument is void or voidable, and who has reasonable apprehension that such instalment, if left outstanding, may cause him serious injury may sue to have it adjudged void or voidable, and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled. 8. 30 Is a contract of the type mentioned above to be adjudged voidable or void? If it was induced by undue influence, then under section 19a of the Indian Contract Act, it would be voidable. It is, however, rarely that contracts of the types to which the principle formulated by us above applies are induced by undue influence as defined by Section 16 (1) of the Contract Act. even though at times they are between parties one of whom holds a real or apparent authority over the other. In the vast majority of cases, however, such contracts are entered into by the weaker party under pressure of circumstances, generally economic, which results in inequality of bargaining power. Such contracts will not fall within the four comers of the definition of "undue influence" given in section 16 (1 ). Further, the majority of such contracts are in a standard or prescribed form or consist of a set of rules. They are not contracts between individuals containing terms meant for those individuals alone. Contracts in prescribed or standard forms or which embody a set of rules as part of the contract are entered into by the party w ith superior bargaining power w ith a large number of persons who have far less bargaining power or no bargaining power at all. Such contracts which affect a large number of persons or a group or groups of persons, if they are unconscionable, unfair and unreasonable, are injurious to the public interest. To say that such a contract is only voidable would be to compel each person w ith whom the party with the superior bargaining power had contracted to go to court to have the contract adjudged voidable. To say that such a contract is only voidable would be to compel each person w ith whom the party with the superior bargaining power had contracted to go to court to have the contract adjudged voidable. This would only result in multiplicity of litigation which no court should encourage and would also not be in the public interest. Such a contract or such a clause in a contract ought, therefore, to be adjudged void. While the law of contracts in England is mostly "judgemade', the law of contracts in India is enacted in a statute, namely, the Indian Contract Act, 1872. In order that such a contract should be void. it must fall under one of the relevant sections of the Indian Contract Act. The only relevant provision in the Indian Contract Act which can apply is S. 23 when it states that "the consideration or object of an agreement is lawful, unless. . . the court regards it as. . . . . opposed to public policy. " 8. 31 The Contracts Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or ''contrary to public policy" are incapable of precise definition. Public policy. however, is not the policy of a particular government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new" concepts take the place of old. transactions which were once considered against public policy are now being upheld by the courts and similarly where there has been a w ell-recognised head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public policy. There are two schools of thought "the narrow view" school and "the broad view" school. According to the former, courts cannot create new heads of public policy whereas the latter countenances judicial law - making in this area. There are two schools of thought "the narrow view" school and "the broad view" school. According to the former, courts cannot create new heads of public policy whereas the latter countenances judicial law - making in this area. The adherents of the "the narrow view" school would not invalidate a contract on the ground of public policy unless that particular ground had been well established by authorities. Hardly ever has the voice of the timorous spoken more clearly and loudly than in these words of Lord Davey in Janson v. Driefontein Consolidated Mines, Limited (1902) AC 484. 500, "public policy is always an unsafe and treacherous ground for legal decision. " That was in the year 1902. Seventy-eight years earlier, Burrough, J. in Richardson v. Mellish (1824) 2 Bing 229, 252 SC 130 ER 294, 303, and (1824-34) All ER Reprint 258, 266, described public policy as "a very unruly horse, and when once you get astride it you never know where it will carry you. " The Master of the Rolls. Lord Denning, however, was not a man to shy away from unmanageable horses and in words which conjure up before our eyes the picture of the young Alexander the Great Taming Bucephalus, he said in Enderby Town Football Club Ltd. v. Football Association Ltd. (1971) Ch 591, 606, "with a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles. " Had the timorous always held the field, not only the doctrine of public policy but even the Common Law or the principles of equity would never have evolved. Sir William Holdsworth in his "history of English Law". Volume III. page 55, has said : "in fact, a body of law like the common law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to suppress practices which, under ever new disguises, seek to weaken or negative them. " 8. 32 It is thus clear that the principles governing 'public policy' must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. " 8. 32 It is thus clear that the principles governing 'public policy' must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority the courts have before them the beacon light ofthe Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution. 8. 33 The normal rule of Common Law has been that a party who seeks to enforce an agreement which is opposed to public policy will be non-suited. The case of A. Schroeder Music Publishing Co. Ltd. v. Macaulay (1974 1 WLR 1308), however, establishes that where a contract is vitiated as being contrary to public policy, the party adversely affected by it can sue to have it declared void. The case may be different where the purpose of the contract is illegal or immoral. In case Kedar Nath Motani v. Prahlad Rai (1960) 1 SCR 861 : ( AIR 1960 SC 213 ) reversing the High Court decision and restoring the decree passed by the trial court declaring the appellants' title to the lands in suit and directing the respondents who were the appellants benamidars to restore possession, the Supreme Court, after discussing the English and Indian law on the subject held: 'the correct position in law, in our opinion is that what one has to see is whether the illegality goes so much to the root ofthe matter that the plaintiff cannot bring his action without rely ing upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the plaintiff is not required to rest his case upon that illegality. then public policy demands that the defendant should not be allowed to take advantage ofthe position. If the illegality be trivial or venial, as stated by Williston and the plaintiff is not required to rest his case upon that illegality. then public policy demands that the defendant should not be allowed to take advantage ofthe position. A strict view of course, must be taken of the plaintiffs conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by mis stating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant should not prevail. " 8. 34 The types of contracts to which the above principle applies are not the contracts which are tainted with illegality but are contracts which contain terms which are so unfair and unreasonable that they shock the conscience of the Court. They by and large are opposed to public policy and require to be adjudged void. 8. 35 Applying the above criterion. \ve will now test the validity of the stand taken by the respondents as to whether the sen ices of the petitioner were terminat'xl in accordance with the terms and conditions of his 'contract of service' or the same were terminated by the respondents in an arbitrary, illegal and unconstitutional manner by following a naked "hire and fire' rule as submitted by the petitioner 8. 36 The petitioner, during the course of arguments, submitted that the termination of his services by the respondents cannot, by am stretch of imagination, be treated or termed as 'simplicitor termination' and that he was subjected to all the suffering because he incurred the annoyance and displeasure of Sh. A. B. A Gani Khan Chaudhary (respondent No. 4) and Sh. Gargi Shankar Mi- shra (respondent No. 5) due to the following factors/reasons:- a) that he was made Chairman-cum-Managing Director of Coal India Limited much against the wishes of respondent No. 4, which respondent No. 4 could not digest and felt humiliated; b) that as Chairman-cum-Managing Director. A. B. A Gani Khan Chaudhary (respondent No. 4) and Sh. Gargi Shankar Mi- shra (respondent No. 5) due to the following factors/reasons:- a) that he was made Chairman-cum-Managing Director of Coal India Limited much against the wishes of respondent No. 4, which respondent No. 4 could not digest and felt humiliated; b) that as Chairman-cum-Managing Director. Coal India Limited w ith a view to root out corruption, the petitioner introduced a Scheme, known as "off The Shelf Sale Scheme", which hit the vested interest in the higher circles and caused annoyance to respondent No. 5 in particular; and c) that Sh. A. B A Ghanikhan Chaudhary (respondent No. 4) wanted his persons, from his own constituency 'maida", to be appointed in Coal India Limited, which the petitioner refused as the same was contrary to the procedure and not in the interest of the Institution. The above refusal to accommodate the persons of respondent No. 4 in Coal India Limited-caused considerable annoyance to the said respondent against the petitioner. ( 9 ) THE petitioner in his written submissions has stated that Sh. R. N. Sharma, the then Chairman- cum-Managing Director of Coal India Limited was to superannuate on 31. 3. 82. Respondent No. 4, Sh. A. B. A. Ghani Khan Choudhary, who at the relevant time was working as Minister of Energy, Govt. of India, had recommeneded that said Mr. Sharma may be given extension for one year. The above said recommendations of respondent No. 4, however, did not find favour with the then Prime Minister. Thereupon the said respondent recommended that the then Secretary, Coal, Govt. of India, Mr. S. R. Das be given the additional charge of the post of Chairman-cum-Managing Director of Coal India Limited, which too w as not accepted by the then Prime Minister, w ho ordered that the charge be given to the senior most officer in the line w ithin the undertaking and the selection of the incumbant on regular basis be made early. It is submitted in the written submissions that the above directions of the then Prime Minister w ere also resisted by the said respondent and w hile doing so the Ministry indicated that they were not aware of the comparative seniority of the Chairman-cum-Managing Directors of the Coal Companies as no Seniority Rules bad been framed by then. It is submitted in the written submissions that the above directions of the then Prime Minister w ere also resisted by the said respondent and w hile doing so the Ministry indicated that they were not aware of the comparative seniority of the Chairman-cum-Managing Directors of the Coal Companies as no Seniority Rules bad been framed by then. It is submitted that Prime Minister's Secretariat asked for a data about each of the Departmental candidates, eligible for consideration for the above said post and on examination of the data supplied by the Coal Ministry, the then Prime Minister directed that the petitioner, being the senior most, be given additional charge of the post of Chairman-cum-Managing Director Coal India Limited. The petitioner in his written submissions has further submitted that it was on telephonic instructions from the Prime Minister's Secretariat that ultimately the charge of the post of Chairman-cum-Managing Directror Coal India Limited was given to the petitioner on 8. 4. 82. The submission of the petitioner, in the written submissions is that the then Minister of Energy (respondent No. 4) felt humiliated on the above count and from then the said Minister was hostile towards him without any fault on the part of the petitioner. 9. 2 In so far as the above submission of the petitioner is concerned, the same has failed to impress us because the above pleas have not been taken by the petitioner in his petition. Moreover. respondents 1 and 2 in their counter affidavits have clearly stated that the petitioner was given additional charge of the post of Chairman-cum-Managing Director, Coal India Limited from the afternoon of 8. 4. 82 till the selection of a regular incumbant to the said post. Nothing has been stated, touching the above aspect, by the petitioner in the rejoinder filed by him to the above said counter affidavit of respondents 1 and 2. In our opinion, in the absence of specific pleas in the petition to the above effect, the above submission, as at (a) above. made by the petitioner in the written submissions in no way helps the case of the petitioner and thus we do not find any substance in the above submission of the petitioner. Regarding (b) above; 9. 3 The case putforth by the petitioner is that he took over as Chairman-cum-Managing Director Coal India Limited on 8. 4. 82 and on 17. 4. 82. Regarding (b) above; 9. 3 The case putforth by the petitioner is that he took over as Chairman-cum-Managing Director Coal India Limited on 8. 4. 82 and on 17. 4. 82. Dr. Sen Gupta, the then Additional Secretary in the Prime Minister's Secretariat visited the Coal India Headquarters at Calcutta and had a meeting with the petitioner and the other Heads of the Department of Coal India and some of the Chairman-cum- Managing Directors ftffhe subsidiary Companies. Mr. Sen Gupta during the above said visit stated that Prime Minister's Secretariat had definite information about corruption and malpractices in the distribution and sale of coal in Coal India. The petitioner assured said Sh. Sen Gupta that he would take effective steps w ithin a week and w ith a view to root out corruption cvoh ed a new scheme known as 'off the Shelf Sale Scheme', making available over 10 million tonnes of Coal on free sale and banning the issue of ad hoc delivery orders of coal to the traders and middle men as distinct from the actual consumers which were issued by the Coal India officers or officers of subsidiary companies on the references/directions/ instructions of the Ministers, Members of Parliament and in some cases through the Special Assistant to the Ministers. It is alleged that the said releases comprised superior grade coal to coal merchants which at that time commended a premium of about Rs. 150. 00 per ton in the open market. As per the case of the petitioner, as putforth by him during the arguments, the significant feature of the above said new scheme was that the same prohibited issue of ad hoc release of coal by anyone thereby taking away the discretion on the part of respondents 4 and 5 and other authorities and officers of Coal India and other subsidiary Companies. As a result of new scheme, special allocations of high grade coal which were issued earlier in favour of middle men who used to sell the same in open market at a very high premium, were discontinued. It is alleged that the above move was resented by the persons in power as their interests were adversely affected. 9. 4 It is alleged that on 20. 4. 82. the petitioner was asked by respondent No. 5 (Sh. It is alleged that the above move was resented by the persons in power as their interests were adversely affected. 9. 4 It is alleged that on 20. 4. 82. the petitioner was asked by respondent No. 5 (Sh. Gargi Shankar Mishra), the then Minister for Coal, Government of India to amend the new scheme so as to accommodate the cases for ad hoc release which would be recommended by the Ministers. The petitioner did not agree to the above suggestion of the Minister as that would have vitiated the scheme as a whole. It is alleged that the above said scheme, as originally envisaged was launched on 17. 5. 82. It was submitted by the petitioner during the course of arguments that those hit hard by the above said new scheme, ending ad hoc release of coal, joined their hands together to ensure that the above scheme was withdrawn and the petitioner was removed from the scene. 9. 5 Respondents 1 and 2 in their counter have stated that unrestricted sale or free sale of coal was in operation from 1. 9. 80 to 16. 5. 82 and the Scheme launched by the petitioner w. e. f. 17. 5. 82 was almost similar in nature to the above said unrestricted sale or free sale of coal which was in vogue earlier and that there was nothing new in the above said Scheme. Similar is the stand taken by respondent No. 3, the Coalfield Limited in its counter. The counter filed on behalf of respondent No. 6 (Coal India Limited) is silent on the above aspect. 9. 6 Thus the stand taken by the respondents 1,2 and 3 in their counter affidavits is that the scheme launched by the petitioner w. e. f. 17. 5. 82 known as 'off the shelf Sale Scheme', introduced on 17. 5. 82, was not a new scheme as the same was similar to the scheme of unrestricted sale or free sale of coal which was in operation from 1. 9. 80 to 16. 5. 82. We have carefully gone through the material on record including the Scheme which was in force from 1. 9. 80, a copy of which is annexed with the counter of respondents 1 and 2 and marked as Annexure - 'a' and the above said Scheme introduced by the petitioner and annexed with the petition as Annexure - 'j'. 5. 82. We have carefully gone through the material on record including the Scheme which was in force from 1. 9. 80, a copy of which is annexed with the counter of respondents 1 and 2 and marked as Annexure - 'a' and the above said Scheme introduced by the petitioner and annexed with the petition as Annexure - 'j'. From a perusal of both the Schemes it cannot be stated that they are similar in nature in respect of material aspects. The distinct feature of the Scheme, introduced by the petitioner from 17. 5. 82, known as 'off the shelf Sale Scheme', was that under the above said scheme, there was no provision for the release of coal on the basis of ad hoc release orders which took away the discretion on the part of respondents 4 and 5 and other important functionaries. The contention of respondents 1,2 and 3 that both the Schemes were similar in nature further stands belied from documents annexed with the petition and marked as Annexure P-4 (pages 254 to 257 ). From a perusal of the above said documents, it is apparent that even after 1. 9. 80, coal has been released on the recommendations of the Minsters, Members of Parliament and other important functionaries w hich indicates discretionary release of coal, which was banned under the scheme introduced by the petitioner w. e. f. 17. 5. 82, 9. 7 The petitioner in his petition has specifically stated that the ad hoc release of coal resulted in malpractices as a result of which the middle men were in a position to get a premium of about Rs. 150. 00 per ton on coal. This averment of the petitioner has not been denied by any of the respondents i. e. respondents 1,2,3 and 6, who have filed their counter affidavits. Thus the above averment has gone on record unrebutted and unchallenged. 9. 8 The petitioner in his petition has also made a specific allegation, alleging that on 20. 4. 82, he was asked by respondent No. 5 (Sh. Gargi Shankar Mishra, the then Minister of State for Coal) to amend the new scheme with a view to accommodate the cases for ad hoc releases w hich w ere to be recommended by the Ministers and that the petitioner advised the Minister that the Scheme would be vitiated if any such amendment was made therein. Gargi Shankar Mishra, the then Minister of State for Coal) to amend the new scheme with a view to accommodate the cases for ad hoc releases w hich w ere to be recommended by the Ministers and that the petitioner advised the Minister that the Scheme would be vitiated if any such amendment was made therein. Though the allegation is specific and by name yet the fact remains that respondent No. 5 though served, has not cared to file any counter rebutting the above said allegations. We will see what the other respondents have to say in so far as the above allegation is concerned. Respondents 1 and 2 in their counter with regard to the above allegation state - "as regards the allegations of a personal nature made against respondent No. 5. these answering respondents are not in a position to comment thereon". 9. 9 Respondent No. 3 (Central Coalfields Limited) in its counter states - "with reference to paragraph 9 of the writ petition, it is submitted that the contents thereof are not within the knowledge of the answering respondent and, therefore, no reply can be given in that behalf. 9. 10 Respondent No. 6 (Coal India Limited) has also given reply to the above said allegations on the similar lines stating that the contents of para 4 of the petition are not within the knowledge of the above said respondent and, therefore, no reply can be given in that behalf. 9. 11 It is the allegation of the petitioner that respondent No. 5 asked him on 20. 4 82 to amend the new scheme so as to accommodate the cases for ad hoc releases which were to be recommended by the Ministers The above allegation of the petitioner thus have gone on record unrebutted and unchallenged and in the presence of the facts as stated above. we have no option but to accept the same on their face value. 9. 12 During the course of arguments, referring to the various averments made in the writ petition. the petitioner submitted that the above step taken by him to root out corruption caused annoyance to respondents 4 and 5 and a campagin of collecting complaints against him was started and complaints were obtained by respondent No. 5 against him from various persons/agencies. 12 During the course of arguments, referring to the various averments made in the writ petition. the petitioner submitted that the above step taken by him to root out corruption caused annoyance to respondents 4 and 5 and a campagin of collecting complaints against him was started and complaints were obtained by respondent No. 5 against him from various persons/agencies. The petitioner invited our attention to one such complaint annexed with the petition and marked as Annexure-K from one Sh. Ram Kailash Chaubey. As already stated, there is no denial by respondent No. 5 to the above allegation. On the contrary in the counter filed on behalf of respondents 1 and 2, it has been admitted that a letter was received from Sh. Ram Swaroop Ram. M. P. by the Minister of State alleging corruption in Coalfields Limited. Nothing has been stated in the counter affidavits of respondents 1,2,3 and 6 with regard to the complaint of said Sh. Ram Kailash Chaubey (annexured with the petition and marked as Annexure-K ). The contents of the above said complaint also lend credence to the version of the petitioner. 9. 13 In the presence of the above said facts, it cannot be stated that the plea taken by the petitioner at (b) above is without any substance. ( 10 ) THE petitioner has specifically stated in the petition that on 15. 8. 82. Sh. A. B. A. Gahni Khan Choudhary (respondent No 4 ). who at the relevant time was the Minister for Energy asked the petitioner to appoint 25 persons from 'malda'. the constituency of the Minister in Coal India Limited and each of its subsidiary companies The petitioner, it is alleged, expressed his inability to do so which caused annoyance to respondent No. 4 and the said respondent called the Chairman-cum-Managing Director of Bharat Cooking Coal Limited from Dhanbad and asked him to appoint the 25 persons as per the list handed over to him and the Chairman-cum-Managing Director of Bharat Cooking Coal Limited issued 25 appointment letters at Calcutta itself in total violation of the recruitment policy and procedure. The petitioner has annexed a copy of the appointment order together with the list as Annexure (L) with the petition. 10. 2 In the above context, the following observations of the Supreme Court in case C. S. Rowjee and ors. Vs. State of Andhra Pradesh and ors. The petitioner has annexed a copy of the appointment order together with the list as Annexure (L) with the petition. 10. 2 In the above context, the following observations of the Supreme Court in case C. S. Rowjee and ors. Vs. State of Andhra Pradesh and ors. reported as AIR 1964 SC 962 are of utmost significance:- "it is, no doubt, true that allegations of malafides and of improper motives on the part of those in power are frequently made and their frequency has increased in recent times. It is also somewhat unfortunate that allegations of this nature which have no foundation in fact. are made in several of the cases which have come up before this and other Courts and it is found that they have been made merely with a view to cause, prejudice or in the hope that whether they have basis in fact or not some of it at least might stick. Consequently it has become the dut\ of the Court to srtutinisc these alegations with care so as to a\ oid being in an\ manner influenced by them, in cases where the hav no foundation in fact. On this task which is thus cast on the courts it would conduce to a more satisfactory' disposal and consideration of them if those against whom allegations are made came forward to place before the Court either their denials cr their version of the matter, so that the Court may be in a position to judge as to whether the onus that lies upon those who make allegations ofmala fides on the part of authorities of the status of those with which this appeal is concerned, have discharged their burden of proving it. In the absence of such affidavits or of materials placed before the Court bv these authorities, the Court is left to judge of the veracity of the allegations merely on tests of probability w ith nothing more substantial by way of answer. " (Emphasis supplied) 10. 3 Our task of sifting the truth from the chaff would have been easier had there been any affidavit of respondent No. 4, but as already stated, the above said respondent though served has not cared to file any affidavit controverting the above said allegations. " (Emphasis supplied) 10. 3 Our task of sifting the truth from the chaff would have been easier had there been any affidavit of respondent No. 4, but as already stated, the above said respondent though served has not cared to file any affidavit controverting the above said allegations. Respondents 1 and2 in their counter affidavit also say nothing about the above aspect except that the 25 persons alleged to have been appointed have not joined duty in Bharat Cooking Coal Limited. Dhanbad. They have not stated a word as to whether any appointment letter to the above said persons w ere issued as alleged by the petitioner. Respopndent No. 3 in its counter has shown ignorance even about the appointment of the 25 persons and has simply stated that the respondent company was informed that none of the 25 persons, as alleged, ever joined Bharat Cooking Coal Limited at Dhanbad. . Respondent No. 6 in its counter has also pleaded ignorance about the above said appointments and lias simply stated that there is no record of the 25 persons w hose names have been mentioned in the writ petition with regard to their employment on the roles of Bharat Cooking Coal Limited at Dlianbad or at Calcutta. Respondents have not even cared to file an affidavit of the then Chainnan-cum-Managing Director of Bharat Cooking Coal Limited, who as per the allegations of the petitioner, issued the appointment letters to the 25 persons as per the details given in Annexurc-L. From a perusal of the contents ofanncxure-L. annexed w ith the petition, it is apparent that the 25 persons as per list attached were appopinted as trainees in 'bharat Cooking Coal Limited' vide order dated 14. S. 82. From a perusal of the list attached with the above said order, it is further apparent that most of them belonged to 'maida". It is worth mentioning that the contents of the above said document marked as Annexure -L too have gone on record unrebutted and unchallenged. Even respondents 1 and 2 in their counter affidav it have not denied the fact of the issuance of the said appointment letter. They have simply stated that none of them joined at Dhanbad. 10. 4 In view of the above discussion, in our opinion, the reasoning advanced at (c) above by the petitioner also supports the case of the petitioner. They have simply stated that none of them joined at Dhanbad. 10. 4 In view of the above discussion, in our opinion, the reasoning advanced at (c) above by the petitioner also supports the case of the petitioner. ( 11 ) FROM the above facts, if the same are read together, the only infrence that can reasonably be drawn is that the removal of the petitioner vide impugned communications was not a "simplicitor termination', as contended by respondents 1. 2. 3 and 6 in their counter affidavits and the course of e\ents as narrated above clearly indicate the "motive' which became the "foundation' of the impugned communications, resulting in the termination of the services of the petitioner. The impugned communications dated the X. 2. 19s3 and 19. 2. 19s3 issued by the Govt. of India. Ministry of Energy. Department of Coal are. therefore, unsustainable in tlie eyes of law. ( 12 ) THE case of the petitioner is that even after his termination of services as Chairman-cum- Managing Director of respondent No. 3 vide impugned communication date the 8. 2. 1983, he continued to have his 'lien' on the post of Directror (Administration) of respondent No. 3 to which post he was substantively appointed. The Supreme Court in case Moti Ram Vs. NEF Railway reported as AIR 1964 SC 600 have held that a person who has been appointed substantively to a permanent post acquires the legal right to continue in that post until any of the following contingencies happen:- (a) Superannuation; (b) Compulsory retirement according to relevant Rules; (c) Abolition of that post, in the exigencies of public service; and (d) Removal or dismissal in conformity with Article 311 (2) of the Constitution. 12. 2 In the year 1975, the Nationalised Coal Industry was restructured and the Coal Mines Authority Limited was renamed as Coal India Limited Coal India Limited became the holding company of the entire Coal Industry which was divided into subsidiary companies of Coal India viz. Bharat Cooking Coal, Central Coalfields Limited, Western Coalfields Limited, Eastern Coalfields Limited and Coal Mines Planning and Development Institute Limited and a 'common Coal Cadre' was set up for Coal India Limited (a holding company) and all the above mentioned subsidiary companies including Central Coalfields Limited (respondent No. 3) indicating the personnel taken from the erstwhile coal companies REFERRED TO to above. Common rules governing the conditions of service of the Common Coal Cadre were also framed and they were applicable to the employees of the holding company (Coal India Limited) and its subsidiary companies. Even the conduct and discipline of those employees were governed by a common set of rules known as 'coal India Executives Conduct, Discipline and Appeal Rules'. Rule 2. 1 of the above said rules provided:- "these rules shall apply to all employees holding posts in the Executive Cadre scales of pay of Coal India and its subsidiary companies and to such other employees as may be notified by the Company from time to time". 12. 3 The petitioner, as per his own averments joined the NCDC as Chief Personnel Officer in the year 1963. In 1965, he left NCDC and joined the Fertiliser Corporation of Indians Industrial Relations Adviser where he was confirmed subsequently. In December, 1970 he joined NCDC as Director (Administration ). On 17. 3. 72, the President of India approved the permanent absorption of the petitioner in NCDC (National Coal Development Corporation ). As a result of the above order, the petitioner, as per his submissions made by him during the course of arguments, became a permanent employee of NCDC and his lien on the post of Industrial Relations Adviser in the Fertiliser Corporation India Limited was terminated. The above fact that on 17. 3. 72, the petitioner was permanently absorbed in NCDC has been admitted by respondents 1 and 2 in their counter affidavit. On 9. 7. 73, the petitioner w as appointed as Director (Personnel and Industrial Relations) in the Coal Mines Authority of India for a period of 5 years. On 9. 10. 73, a clarificatrion was issued by the Chairman Coal Mines Authority Limited that as NCDC was a subsidiary of Coal Mines Authority Limited, it was immaterial whether the petitioner continued as permanently absorbed in NCDC or whether his services were transferred to Coal Mines Authority Limited. It w as argued by the petitioner that the effect of the above arrangement inter alia was that his substantive position as permanent employee of NCDC was maintained while he worked as Director (Personnel and Industrial Relations) in the holding company viz. Coal Mines Authority Limited. On 11. 2. 74, the petitioner was appointed as Director NCDC and on 4. 11. 74, the petitioner was appointed as Managing Director of NCDC. Coal Mines Authority Limited. On 11. 2. 74, the petitioner was appointed as Director NCDC and on 4. 11. 74, the petitioner was appointed as Managing Director of NCDC. On 10 10. 77, the petitioner was transferred as Chairman-cum-Managing Director of Bharat Cooking Coal Limited (also a subsidiary of Coal India Limited ). On 27. 1. 79, the petitioner was transferred back as Chairman-cum- Managing Director of Central Coalfields Limited (respondent No. 3) and on 8 4. 82. the petitioner was given additional charge as Chairman-cum-Managing Director of Coal India Limited. The case of the petitioner in nutshell is that no doubt after 17. 3. 72 i. e. after his permanent absorption in NCDC, he occupied various assignments, but the fact remains that he continued to be a 'substantive holder' of a post in NCDC i. e. Director (Administration) on which all through he had a 'lien'. 12. 4 The counter affidavits filed on behalf of respondents 1,2,3 and 6 in no way help us in resolving the above controversy. On the contrary, respondents 1 and 2 in their counter have admitted that the President of India approved the permanent absorption of the petitioner in NCDC vide letter dated 17. 3. 72. In so far as the above controversy is concerned, letter dated 9,10. 73 (Annexure - C) issued by Sh. R. G. Mahendru, Managing Director of NCDC is of utmost significance. The operative portion of the aforesaid communication reads as under:- ''to Shri B. L. Wadhera, Director (Pandir), Coal Mines Authority Ltd. , Calcutta-17 Sub: Retention of lien of Shri B. L. Wadhera in the post ofdirector (Admn.), NCDC Limited pending his permanent absorption as Director (Pandir), Coal Mines Authority, Calcutta. Dear Sir, with reference to above, the observation of the Chairman dated 11. 9. 73 is reproduced below:- " As the NCDC limited is a subsidiary of the Coal Mines Authority Limited, it is immaterial whether Shri Wadhera continues as permanently absorved in the NCDC at present or whether his sen ices are transferred for permanent absorption in the CMAL. The present position, therefore, should continue. In this connection I might refer to the case of Shri Chari, who, though is now holding a top level post of Secretary in the Govt. of India. Department Mines, Ministry of Steel and Mines, continues to be an employee of the NCDC on deputation to the Government of India". The present position, therefore, should continue. In this connection I might refer to the case of Shri Chari, who, though is now holding a top level post of Secretary in the Govt. of India. Department Mines, Ministry of Steel and Mines, continues to be an employee of the NCDC on deputation to the Government of India". This is for your kind information. " 12. 5 From the narration of the above facts, it is apparent that the petitioner remained a permanent employee of NCDC a subsidiary of Coal India Limited and while being so, he was appointed, transferred or given charge of different positions at the same or higher levels in the subsidiary companies of Coal India Limited or the holding company itself or in the Ministry at New Delhi, but the fact remains that he continued to have his 'lien' on the substantive post in NCDC as claimed by him. ( 13 ) HAVING arrived at the above conclusion, more particularly the conclusion that the impugned communications dated the 8. 2. 83 and 19. 2. 83, both issued by the Govt. of India, Ministry of Energy. 208 Department of Coal are unsustainable in the eyes of law, the question remains to be decided is that in the given circumstances to which relief (s), the petitioner is entitled. 13. 2 The petitioner was appointed as Chairman-cum-Managing Director of respondent No 3 on 27. 1. 79 and the tenure of the above said appointment was extended for a further period of 2 years w. e. f. 9. 7. 81 by the Govt. of India. Ministry of Energy, Department of Coal vide letter No 380l4 (l2)77-CA/vol II dated the 26. 12. 81. The operative portion of the above said communication runs as under:- "i am directed to say that in pursuance of Article 34 of the Article of Association of Central Coalfields Limited the President is pleased to extend the tenure of the appointment of Dr. B L. WAdhera, at present Chairman-cum-Managing Director. Central Coalfields Limited in the same post for a further period of two years with effect from 9. 7. 1981 on the same terms and conditions as specified in letters No. 38014 (4)73-C3 dated 12. 10. 1973 and 2. 11. 1974 and 38011 (3)/77-CA dated 22. 7. 1977" 13. 3 Thus in terms of the above orders of the Govt. Central Coalfields Limited in the same post for a further period of two years with effect from 9. 7. 1981 on the same terms and conditions as specified in letters No. 38014 (4)73-C3 dated 12. 10. 1973 and 2. 11. 1974 and 38011 (3)/77-CA dated 22. 7. 1977" 13. 3 Thus in terms of the above orders of the Govt. of India, the correctness of which is not disputed even by the respondents, the petitioner, but for his termination as a result of the above said impugned communications would have continued as Chairman-cum-Managing Director of respondent No. 3 for a period of two years with effect from 9. 7. 1981 13. 4 After the expiry of the above said period, the petitioner in the event of his above term not being extended, which we presume so, would have reverted back to his substantive rank as Director of respondent No. 3 where he was having his lien and from which post he would have retired on attaining the age of 58 years in terms of the provisions contained in para 15. 2. Chapter XV, relating to "common Coal Cadre" governing the 'retirement and exits' of the employees of Coal India Limited and its subsidiary companies including respondent No. 3. ( 14 ) IN view of the position explained above, the petition is allowed. The impugned communications dated the 8. 2. 1983 and 19. 2. 1983, both issued by Govt. of India, Ministry of Energy, Department of Coal, are hereby quashed and it is directed that from 8. 2. 83 till 8. 7. 83. ,the petitioner would be entitled to all consequential benefits of pay and perks etc, which he would have been entitled as Chairman-cum- Managing Director of respondent No. 3 and thereafter from 9. 7. 83 upto the age of superannuation (date of retirement in normal course on attaining the age of 58 years), all the consequential benefits of pay and perks etc as Director of respondent No 3 The payments in terms of the above order be calculated by respondents 1,2,3 and 6 and paid to the petitioner w ithin eight weeks from the date of this order. In case, the above payment, in terms of this order is not made to the petitioner within the above said period, the petitioner will be entitled for payment of interest a 18 percent per annum on the amount due and payable to him after the expiry of the above said period of eight weeks till actual payment. In the facts and circumstances of the case, no order as to costs.